More than one lakh working days lost in strike action in 2022

The government is effectively asking public sector employees to do their “citizen duty” and accept real terms pay cuts – a difficult thing to swallow when private sector employees are driving wage growth in the economy. hard pill.

Wages are climbing at near their fastest pace since records began.

Still, workers’ pay packets are shrinking at near their fastest pace since records began.

Both these seemingly contradictory statements are true. Employees are fighting for pay increases and having some success but benefits are no match for inflation, which is tearing through paychecks.

Official figures show regular pay, excluding bonuses, rose 6.1% in the three months to October. Outside of the pandemic (when wage data was distorted by furloughs) this is the fastest rate of wage growth since records began in 2001.

However, at 10.7%, inflation is on the rise.

Prices have risen at their fastest pace in 41 years, leaving many households poorer even if they have managed to achieve huge wage increases.

When inflation is taken into account, real wages declined by 3.9% during this period. In October alone, they fell 4.2%.

It is at the heart of the industrial disputes Britain is experiencing up and down the country.

In October alone, 417,000 working days were lost due to strikes in the country. This is the highest October figure for more than 10 years.

In 2022, more than one lakh working days were lost in the strike action. This means the latest round of strike action has been more disruptive than the 2011 strikes, when public sector workers walked out in a row over pensions, costing the economy nearly a million dollars. Working days.

The government says higher wage growth can trigger a wage-price spiral, whereby wages in the economy chase prices, making the inflation problem worse.

Britain faced a similar problem in the 1970s, culminating in the “Winter of Discontent”.

Chancellor Jeremy Hunt emphasized this point following the release of the latest figures.

“To get the British economy back on track, we have a plan that will help halve inflation [in 2023] — but it still requires some tough decisions. Any action that risks embedding higher prices into our economy will only prolong the pain for everyone, and stall any potential for long-term economic growth,” he said.

The Bank of England is also keeping a close eye on wages and the latest jump in wages, although not in real terms, could compel the Bank of England to take stronger action to stop the threat of a wage-price spiral.

The government is effectively asking public sector employees to do their “civic duty” and accept real terms pay cuts. It’s a tough pill to swallow when it’s private sector workers who are driving wage increases in the economy.

The ONS revealed that private sector wages increased by 6.9% during the three-month period, while public sector wages increased by 2.7%.

This is one of the biggest barriers between public and private sector salaries and could exacerbate problems with recruitment and retention that the private sector already grapples with.

Still, the pay discrepancy may be starting to narrow. With the economy already likely in recession, unemployment will most likely rise (it ticked up to 3.7% in the three months to October) and wage pressures will begin to fall.

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