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Are your wages keeping up with inflation? Find out here…

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Some industries have awarded pay rises equal to or exceeding inflation, while other sectors lag behind, analysis reveals.

Inflation stood at 11.1% in October, rising from 10.1% in September and 9.9% in August.

Meanwhile, average wages in the UK have risen at a slower pace than prices, according to the Office for National Statistics (ONS).

In July to September 202, regular wages rose 5.7% year-on-year, and total pay, which includes bonuses, rose 6%.

Overall, this means pay has fallen in real terms, i.e. once inflation has been factored in and as such, workers are having to pay a larger proportion of wages to buy the same goods.

However, the ONS said not all workers have seen prices rise faster than their pay during the year.

Sectors with the highest wage growth

Professional, scientific and property pay growth was above inflation before and during the pandemic, and continued to exceed inflation in early 2022.

But as inflation’s soared, regular wage growth has fallen behind inflation in all industries except professional and scientific sectors, including legal services, management, engineering and scientific research.

Between May to July 2022, these industries were the only ones where regular wage growth (excluding bonuses) remained higher than inflation, sitting at 10.1% in July to September 2022, so they were up more than 10% in a year.

The ONS noted wage growth in other industries, such as property, information and communication, retail, and finance, also sat largely above inflation in recent years. However, between January to March 2022 and April to June 2022, rising inflation outpaced regular wage growth in all of these industries.

Bonuses and record vacancies push pay up

Higher bonuses have compensated workers in finance, with these growing faster than prices until the three months to June 2022.

The finance industry also has the highest average regular pay of £1,147 per week in the three months to September 2022. Total pay growth in finance also rose steeply to 15.9% in October to December 2021, the highest rate since the cap on bankers’ bonuses was introduced in the UK in 2013.

The ONS said the record vacancy numbers may be another reason behind wage growth figures, as this figure reached 1.3 million in March to May 2022.

In August to October, there were 54% more vacancies than pre-Covid. Worker shortages can lead to wage increases, as employers compete to attract or keep workers, the ONS explained.

“Four of the five industries where wage growth stayed above inflation in early 2022 (professional and scientific, information and communication, retail and finance), also had vacancy rates in June 2022 that were 1.5 or more percentage points higher than a year before”, the ONS wrote.

Sectors with the lowest wage growth

Meanwhile, public administration and education have seen pay growth below inflation since the second half of 2021.

Regular pay growth in the public sector was 2.2% in July to September 2022 (6.6% private sector) which the ONS said was “ both the largest private sector pay growth and the largest gap between public and private pay growth on record (since January 2000)”.

It said industries with more public sector jobs, such as education and public administration, have seen some of the lowest pay growth in 2022, along with arts and recreation, mining, and power and water.

The ONS added that workers in the arts and entertainment industry have experienced the largest falls in wages in 2022.

Retail, hospitality, arts and entertainment also experienced the most disruption during coronavirus, with a large amount of low paid workers losing their jobs, others were on furlough – 11.7 million jobs were covered by the scheme between 19 March 2020 and 30 September 2021.

While the health industry has seen higher pay growth than education and public administration throughout 2022, it has remained below inflation. In July to September 2022, regular wage growth in the health industry was 4.7%, compared with 2.9% in education and 3.6% in public administration.

The ONS has a What are your wages worth? calculator where you can submit your earnings and it estimates how much it would need to rise by to keep up with inflation, and how much you would earn if your pay increased in line with the current average pay growth.

‘No match for inflation’

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “Surging inflation has left few people unscathed with most people’s wages proving no match for rising prices.

“Wage increases in areas such as property and finance were able to keep up with surging costs for a while but have fallen away in recent months with only a relatively few areas such as engineering, scientific research and legal services still able to keep pace. Whether they can continue to do so remains to be seen but it is thought that areas still experiencing relatively high vacancy rates will need to keep wages high to attract the right people.

“The wage rises offered in other industries such as arts and entertainment, as well as for many public sector workers have stood no chance against rising costs meaning many people have already been struggling for quite some time and will continue to do so for the foreseeable future.”

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