Wages fall 3.9% – the fastest rate in 13 years – as cost-of-living crisis bites

Pay is falling at the fastest rate in 13 years as the cost-of-living crisis bites – with older people returning to the jobs market.

As the country is wracked by strikes, official figures showed total wages declining by 3.9 per cent a year in the quarter to October, taking CPI inflation into account.

That was the worst figure since the aftermath of the credit crunch in 2009. Meanwhile, unemployment ticked up to 3.7 per cent and there are signs that struggling older people are returning to the jobs market.

The proportion classed as ‘economically inactive’ decreased by 0.2 percentage points. Job vacancies also dipped slightly, although they remain at a historically high level, reflecting the tightness in the labour market.

October was also the worst month for industrial action in more than a decade, with 417,000 days lost. 

Chancellor Jeremy Hunt said the grim figures showed ‘difficult decisions’ are needed, warning that demanding huge pay rises will only ‘prolong the pain for everyone’ by embedding inflation.    

Official figures showed total wages declining by 3.9 per cent a year in the quarter to October, taking CPI inflation into account

Unemployment ticked up to 3.7 per cent in the quarter to October and there are signs that struggling older people are returning to the jobs market

Mr Hunt said: ‘While unemployment in the UK remains close to historic lows, high inflation continues to plague economies around the world as we manage the impacts of Covid-19 and Putin’s invasion of Ukraine.

‘To get the British economy back on track, we have a plan which will help to more than halve inflation next year – but that requires some difficult decisions now. Any action that risks embedding high prices into our economy will only prolong the pain for everyone, and stunt any prospect of long-term economic growth.

‘With job vacancies at near record highs, we are committed to helping people back into work, and helping those in employment to raise their incomes, progress in work, and become financially independent.’

ONS head of economic statistics Sam Beckett said: ‘This quarter the proportion of people neither working nor looking for a job fell, driven by a drop in the number of working-age people regarding themselves as retired. 

‘This tallies with other data which suggest more people in their 50s are thinking of going back to work, at a time when the cost of living is rising rapidly. 

‘With more people re-engaging with the labour market, there were more in employment and also more who were actively looking for a job.’

‘Though job vacancies are still at a very high level, they continue to fall and are now lower than they were a year ago.

‘Some strikes were suspended in September for the State Funeral of Her Majesty, but the number of working days lost rose again in October, to the highest monthly level in over ten years.’

Regular pay fell by 3.9 per cent on the year, only slightly below the record set in the quarter to June – 4.1 per cent.