ONS report into wages and inflation – professional and scientific sectors keep pace, retail, property and finance suffer

by | Nov 23, 2022

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Since May to July 2022, the professional and scientific industry has been the only one where regular wage growth (excluding bonuses) has remained higher than inflation; sitting at 10.1% in July to September 2022. This means average wages in the industry in this period were 10.1% higher than the same period the previous year.

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.

Following the ONS report into wages and inflation published this morning small businesses and HRs have given their thoughts:

Carla Hoppe, founder of workplace financial education and wellbeing specialists, Wealthbrite“This latest report on wages highlights the pain working people in the UK are feeling. Employers may not be able to pay people more but they can show they care and address the rapid decline in levels of financial wellbeing. Financial education, perks and benefits that match people’s greatest needs and money and mental health training can all create an empathetic space to have a conversation about managing money in difficult times.”

Lauren Thomas, economist at Glassdoor: “As real wages have plummeted, worry about inflation amongst workers has soared. Glassdoor data reveals a threefold increase in mentions of ‘inflation’ in 2022 reviews from UK employees from last year. Unusually high inflation and sluggish productivity since the pandemic are key reasons wages haven’t been able to keep up. Between these issues and the continued difficulty of hiring, now might be a good time for companies to invest in productivity-enhancing tools. But both problems are difficult for any single company to tackle. Until either can be tamed, companies need to listen to what their workers really want to feel supported. Even if an employer cannot raise salaries, there are other ways to support workers, such as increased flexibility, one-off bonuses, winter energy stipends, and more. Each can effectively boost staff morale while limiting long-term financial liabilities for the employer as they are easier to claw back.”

Cheney Hamilton, CEO at Darlington-based flexible working recruiter, Find Your Flex“High earners having wage growth above inflation is unsurprising. It’s the low-income individuals that need closer scrutiny, with wages often stagnating and only increasing yearly as the National Minimum Wage increases. The problem in this area, as I see it, is that most day-to-day employees are predominantly being managed on a cost and budget model basis. This means that they are always restricted on how their income can grow. By contrast, more senior employees, such as C-Suite executives and above, are operating on an outcome-based ROI model, so they have much more opportunity to request and achieve a larger percentage of the wealth that they create for the business. As long as this dysfunctionality exists within the management and operating structures of UK businesses, we will never see the level of growth required in the lower income bracket to pull hard working people out of poverty, and the gap between the haves and have-nots will continue to grow.”

Lee Chambers, a psychologist at Essentialise Workplace Wellbeing“This isn’t the news anyone wants to hear before Christmas, as inflation bites for both employees and a range of businesses. There are structural inequalities in the UK and the current situation is amplifying this, causing significant distress and impacting on the financial wellbeing of the least privileged in society, but also those who’ve not been squeezed like this before. And given the inflation figures rarely track reality, I doubt anyone apart from a chosen few are actually seeing wage growth. If you consider the strikes we’re seeing across multiple industries, we are looking at a winter of discontent.”

Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial: “It’s unsurprising that wages in most sectors aren’t keeping pace with inflation, considering the astronomical rate at which prices are rising at the moment. The figures suggest that employers are using bonuses to prop up total remuneration so they don’t need to commit to this as an ongoing liability. This is a clever use of their cash, and could keep employees onside bearing in mind the very tight labour market we still have. It tends to be the case that those on the highest wages have careers that keep up with the cost of living and those on the lowest pay don’t. This may be because employers consider those skilled workers too valuable to lose, but it does create an even more unequal society.”

Philip Dragoumis, owner of London-based wealth manager, Thera Wealth Management: “Real wages in the UK remain catastrophically negative. There is a reason for this, namely labour structures have not given workers strong pay bargaining power. This means that employees across the developed world are failing to achieve the very minimum aim of at least maintaining their standard of living.”

Maddy Alexander-Grout, CEO of Southampton-based My VIP Rewards“With wages not going up at the same rate of inflation, more employers need to be looking at other ways that they can help to put more money in their employees’ pockets. Employee benefits discount schemes can add another £500+ to an employee’s pay packet and not all schemes cost the earth.”

Chris Maslin, director at Tunbridge Wells-based employee ownership specialists, Go Eo: “Wage rises for all staff make minimal difference in employee-owned companies. Hiking salaries reduces profit, so profit share payments will go down accordingly. They’ll get the same money either way. This can enable employee owned companies to better weather hard times. Staff are more accepting of a temporary financial hit, knowing they really are all in it together, and will benefit when good times return.”

Lewis Shaw, founder of Teesside-based Riverside Mortgages“Living standards have been falling across the UK for over a decade, and we’re about to see the biggest fall in living memory. What’s ironic is that as living standards and real wages fall, the businesses that leach out profit and don’t fairly compensate workers lose customers, which diminishes their business in the long run. We have a cancerous structural inequality problem in the UK, and if it isn’t addressed, it will bankrupt the country. The worst thing is it’s a simple fix. Tax wealth, not just income. We know from various stats that extremely wealthy people often don’t spend the income that’s generated by their wealth, allowing them to buy more assets. This notion that they go out and build houses or finance a wind or solar farm is nonsense. They buy existing assets, not develop new ones. It’s a very easy inference to make that we’ve seen an explosion in millionaire and billionaire wealth yet real wages are falling and homeownership levels are reducing. It doesn’t take a genius to work out what’s going on.”

Kerri-Ann Hargreaves, MD, Talent, at IronMarket“We are noticing a trend in the reasons why jobseekers are choosing to move on, with 50% citing poor pay and the rising cost of living versus 2020/1 where it was all about hybrid working, job security and workplace culture. In Q3 and the start of Q4, we have continued to see an increase in the number of jobs across engineering, procurement and finance. However, this is becoming problematic for businesses as the rising salary expectations of jobseekers are not sustainable. The war on talent remains prevalent in the market and candidates are still king, particularly within finance and accountancy, but less so in engineering where businesses are reluctant to adapt to the ever-changing marketplace.”

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