Real wages have dropped by 1.2% as regular pay growth fails to keep up with soaring inflation, according to the latest official figures suggesting the cost of living crisis may be forcing people to seek work.
The Office for National Statistics (ONS) reported that the fall in regular pay, which excludes bonus payments, intensified when the effects of inflation were included in the three months to March compared to the same period last year.
Growth in total pay remained positive at 1.4%, the report said, due to the effects on bonuses.
However, the squeeze on households is likely to worsen as the Bank of England predicts that inflation will reach 10% this year after hitting a new 30-year-high of 7% in March.
Figures due out on Wednesday are expected, by economists, to show the consumer prices index (CPI) measure exceeding 9% in April - largely a consequence of the 54% leap in the energy price cap.
The wider employment figures continued to show the impact of the shortage of labor in the economy.
The jobless rate fell to its lowest level since 1974 at 3.7% and the ONS said that, for the first time since records began, there were fewer unemployed people than job vacancies though vacancies stood at almost 1.3 million - a new high.
The ONS data comes as Chancellor Rishi Sunak faces increasing pressure to do more to help families struggling with the cost of living.
Frances O'Grady, head of the Trades Union Congress, told Sophy Ridge on Sunday that Mr Sunak has "woefully failed" working people and called for a windfall tax to be imposed on the profits of oil and gas companies.
The number of UK workers on payrolls rose by 121,000 between March and April to 29.5m, the Office for National Statistics said this morning.
Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), said: “While the economy was still growing in the first three months of 2022, there continued to be a mixed picture for the labor market.
“Total employment, while up on the quarter, remains below its pre-pandemic level,” he added. “Since the start of the pandemic, around half a million more people have completely disengaged from the labor market.”
“Jjob vacancies are still rising, reaching yet another record high.”
“Indeed, with the latest fall in unemployment, to its lowest rate since 1974, there were actually fewer unemployed people than job vacancies for the first time since records began,” Morgan continued.
“Continued strong bonuses in some sectors such as construction and especially finance mean that total pay is continuing to grow faster than prices on average, but underlying regular earnings are now falling sharply in real terms.”
The director-general of the CBI has said the Government needs to “slow down the economy, but make sure it doesn’t slow down permanently”, as the number of UK workers on payrolls rises.
Speaking to LBC, Tony Danker said the Chancellor needs to “step in now” to help those hardest hit by the cost of living.
He compared the need to slow down the economy to clutch control on a car and said the Chancellor and Government “need to slow down the economy, but make sure it doesn’t slow down permanently”.
He claimed that “people missing meals is unacceptable”, with many resorting to this measure because of the cost-of-living crisis.
The Office for National Statistics reported the number of UK workers on payrolls rose by 121,000 between March and April to 29.5 million, to which Mr Danker said that “people cannot hire for love and money”, and labor shortages and inflation were the two factors most affecting business at this time.