Official data reveals that workers have suffered a record real-term wage drop in the face of rising prices.
According to the Office for National Statistics (ONS), regular wages, excluding bonuses, fell by an average of 4.1% on the year in the three months to June when inflation is taken into account.
This is the biggest drop since records began more than two decades ago and the ninth consecutive month-on-month drop in real wages, the figures show.
It comes after the consumer price index (CPI) inflation rate hit a 40-year record high of 9.4% in June and is expected to reach 11% by the end of this year.
Bills have risen due to rising energy and fuel bills amid the impact of the Ukraine war, but many have seen wages struggle to keep up.
The squeeze on real wages will increase pressure on the government to take more action to tackle the cost of living crisis.
Excluding inflation, ordinary pay, excluding bonuses, rose 4.7% in the three months to June.
With bonuses, total compensation increased by 5.1%.
There was a significant difference between the public and private sectors.
Public sector workers, many of whom have voted to strike over below-inflation pay offers, saw their total wages rise by just 1.8%, compared to 5.9% in private sector
The wholesale, retail trade, hotel and restaurant sector experienced the highest growth rate at 7.7%, followed by the finance and business services sector and the construction, both with 6.3%.
The data also showed that the number of UK workers on payroll rose by 73,000 between June and July to 29.7 million.
On the other hand, the unemployment rate increased to 3.8% during the quarter compared to 3.7% in the previous period.
The number of vacancies in May to July was 1.274 million, a drop of 19,800 from the previous quarter and the first quarterly decline seen since June to August 2020.
The ONS’s director of economic statistics, Darren Morgan, said: “The number of people in work grew in the second quarter of 2022, while overall rates of unemployment and people not working or looking for work varied little
“Meanwhile, the total number of hours worked each week appears to have stabilized very slightly below pre-pandemic levels.
“Layoffs are still at very low levels.
“However, while the number of vacancies remains historically very high, it fell for the first time since summer 2020.”
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Chancellor Nadhim Zahawi said: “Today’s statistics show that the labor market is in a strong position, with unemployment lower than at almost any time in the last 40 years – good news in what I know are difficult times for the people
“This highlights the resilience of the UK economy and the fantastic businesses that are creating new jobs across the country.”
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He added: “While there are no easy solutions to the cost of living pressures people face, we are providing help where we can.
“We are delivering a £37 billion help package to households through cash grants and tax cuts so people can keep more of what they earn.
“And while we can’t fully protect everyone from these global economic shocks, we are directing this support to millions of the most vulnerable people in our society: those on the lowest incomes, pensioners and people with disabilities.”