Wage growth: Private sector sees all-time high
According to official reports the difference between wage growth in the public sector and the private sector is close to a record high.
The Office for National Statistics says that between August and October, the average pay of private sector workers went up by 6.9%. (ONS).
On the other hand, those workers’ wage growth only went up by 2.7%.
This week, thousands of workers are planning to go on strike. On Thursday, nurses are planning to hold their first-ever nationwide strike.
The difference in wage growth between the public and private sectors is 4.2%, which is just a little less than the 4.4% difference between July and September. So the pandemic hasn’t changed the way the numbers look.
In the three months leading up to October, regular pay went up by 6.1%, according to the Office for National Statistics (ONS). But when prices went up, wages went down by 2.7%.
In both the public and private sectors, wage growth haven’t kept up with inflation, which measures how prices change over time. At 11.1%, it is at its highest level in 40 years.
Some of the things that will happen during a strike over pay and working conditions are:
A new round of strikes by thousands of rail workers began on Tuesday and will last through Wednesday. Later this week, there will be more walkouts.
Members of the CWU who work for Royal Mail will go on strike on Wednesday and Thursday. After this, more protests will happen on December 23 and Christmas Eve.
Later this month, nurses and ambulance workers are also planning to strike.
The ONS said that strikes cost 417,000 working days in October. This was the most since November 2011.
Wage growth and stike analysis
Sam Beckett, in charge of economic statistics at the Office for National Statistics, said that transport and storage and information and communications had been hurt the most by strikes.
She told the BBC’s Today show that the rail and mail strikes had been a big reason for it.
Ms. Beckett said that it was hard to tell how strikes have affected the economy as a whole.
The unemployment rate as a whole went up to 3.7%. From September to November, the number of open jobs went down by 65,000, which was the fifth straight drop for this measure.
Ms. Beckett said that the drop was a sign that the job market “could be starting to soften a little” and that some businesses were starting to close some jobs because they were doing less.
But the ONS said that, despite the drop, there were still almost 1.2 million open jobs, which was close to a record high.
The huge difference in wage growth between the public and private sectors is one of the most interesting facts about these job numbers, and it may be the most telling about the future of labor relations.
This will make pay disputes more difficult when the government is the boss or sets the rules for pay talks.
Private companies can cut back on their goals and pay fewer people, but the NHS can’t do that.
The facts back this up. For example, the number of open jobs in the hospitality industry has dropped by 11%, while the number of open positions in public administration is almost the same and has gone up in education.
At some point, this rubber band is bound to break. Either more people will leave the public sector, which could hurt essential services, or the government will have to give in and agree to pay raises. Something feels like it has to give at some point.
The number of people who are not working and haven’t looked for work in the past few weeks also went down. But, again, the most significant drop was among people 50 to 64 years old.
Jack Kennedy, a UK economist at the staffing firm Indeed, said that there was evidence that some retired people were going back to work because of the wage growth.
He said that could be an early sign that the rising cost of living is making some people change their plans.
Overall, though, the number of people who are not working is still more than 560,000 higher than before the pandemic. This makes it hard to hire people in many different fields, said Mr. Kennedy.
Kai Clarke, who works at Lambeth’s Purple Jay Nurseries branch, said she was glad the company could give its employees a 16% pay raise, even though it was quickly spent.
Why are living costs going up?
The cost of living is going up at the fastest rate in 40 years, mainly because food and energy prices are rising.
In response, the Bank of England raised interest rates by 0.75 percentage points to 3%. This was the most significant increase in interest rates in more than 30 years.
The price of energy is one of the main reasons prices are rising.
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As life went back to normal after Covid, the need for energy increased, so oil and gas prices rose. At the same time, Russia had less to offer because of the war in Ukraine. This made prices go up even more.
Since there was less grain on the market because of the war in Ukraine, food prices also increased.
The prices of food and drinks that don’t contain alcohol went up by 16.2% in the year leading up to October, up from 14.5% in September.