How much are wages going up by and what does it mean for my money?
WAGES across the UK have been rising at their fastest rate on record, but workers will want to know how much by and how it affects them.
Official figures revealed that it is the second consecutive month wages have risen at a record rate.
Basic pay and other related data is published each month by the Office for National Statistics (ONS).
It’s a non-ministerial department which reports directly to Parliament.
Every month the body publishes estimates of employment, unemployment, inactivity, average weekly earnings, vacancies and other labour market related statistics for the UK.
The data that is published typically looks at the three months up to a specific month – for example the latest publication was for March to May.
That obviously means that it does not predict the future.
Below we explain how much wages are rising by and how it affects your money.
How much are wages rising by?
Wages are on the rise for millions of workers across the UK, according to data published this month.
Growth in employees’ average total pay, which included bonuses, was 6.9% and growth in regular pay, excluding bonuses, was 7.3% in the three months from March to May.
It’s the second consecutive month wages have risen at a record rate.
Last month the ONS revealed growth in total pay was 6.5% and growth in regular pay was 7.2% in the three months from February to April.
The fresh figures are good news for households who are battling rising costs due to high inflation.
The UK’s current rate of inflation remains high at 8.7%.
But it’s important to note that when pay doesn’t rise at the same rate as inflation, it leaves people worse off in “real terms” – wages don’t stretch as far because prices are higher.
After taking inflation into account, average pay including bonuses fell by 1.2% in the year to March to May 2023, or 0.8% excluding bonuses.
While, pay in the private sector was up 7.7% and higher than the public sector which grew 5.8%.
What does it mean for my money?
The main concern when workers see a “real-terms” fall in their salary is that it’s not keeping up with the cost of living.
After taking inflation into account, average pay including bonuses actually fell by 1.2% in the year to March to May 2023, or 0.8% excluding bonuses.
That means people’s pay packets have fallen in real-terms, when factoring in other living costs such as food and energy.
Although this is a smaller fall than in previous months.
Wage growth is still behind inflation as prices of everything from groceries to energy bills increase at a faster rate.
Official food inflation figures slipped from 19.1% to 18.4% in May, this just means prices are still rising – but at a slower rate.
Prices are still considerably higher than they were at the start of 2022, with bread and butter more than 20% more expensive.
It means you will be feeling the pinch as your income doesn’t go as far and may end up struggling to pay your bills.
To make matters worse rising wages have been blamed for actually keeping inflation high by Bank of England bosses.
It means the BoE could hike rates again, for the 14th time, to tackle the issue.
High-street banks use the BoE base rate to work out the interest rates it offers to customers.
A further hike means the cost of borrowing, including loans, credit cards and mortgage repayments could become more expensive.
Consecutive hikes from historic lows have piled pressure on homeowners, with more to come if they rise again.
The government has brought in more support for those struggling with higher monthly payments, including extending the term of their mortgage and moving to interest-only repayments.
What help can I get if I’m struggling?
Extra help includes a £900 payment for millions on certain benefits including Universal Credit and a £150-£300 top-up for millions of pensioners.
The £900 has been split into three instalments of £301, £300 and £299.
Over eight million people are eligible for the help in total and should have received the first instalment in June.
The second and third instalments are due to be paid this autumn and in spring 2024.
You qualify for the payments if you receive the following benefits:
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Income Support
- Pension Credit
- Universal Credit
- Child Tax Credit
- Working Tax Credit
Meanwhile, the remaining payment is worth £150-£300 and will be made to millions of pensioners from November.
You will receive the payment if you qualify for this year’s Winter Fuel Payment, which you will get if you were born before September 25, 1957.
The money is essentially a top up to the Winter Fuel Payment which is designed to cover the costs of heating over the colder months.
You will be sent a letter from the Government in October or November if you are eligible for the £150-£300 top up.
You might also be able to get help via the Household Support Fund.
The help is being distributed by councils in England and what you are entitled to varies depending on where you live.
But, in most cases, you will be in line for support if you are on a low income or benefits.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
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