‘Living costs crisis’ looms

Real-terms wages worst for 40 years

MILLIONS of workers are facing one of the worst pay squeezes for more than 40 years.

Figures from the Office for National Statistics showed average pay grew 1.7 per cent year on year in the three months to April.

Yet inflation was running at about 2.3 per cent over that period.

The resulting 0.6 per cent real-terms fall in wages was the biggest – barring that of the 2008-2014 financial crisis – since 1978, according to think tank the Resolution Foundation.

Inflation jumped to 2.9 per cent last month.

TUC general secretary Frances O’Grady said: “Unless the Government get their act together, we’ll soon be in the middle of another cost-ofliving crisis.”

John Hawksworth, chief economist at PwC, said: “The squeeze on real pay growth is getting serious and is likely to dampen consumer spending.”

The slowdown came despite the number of people in work reaching a record high of nearly 32million – 372,000 more than a year ago and the highest total since records began in 1971.

Unemployment fell by 50,000 in the quarter to April – to 1.53million.

New Work and Pensions Secretary David Gauke ignored the pay data as he focused on the job numbers.

He said: “This is yet another strong set of record-breaking figures, with employment up and unemployment down, fuelled by full-time opportunities.”

The ONS figures showed the number of workers in the public sector has fallen by 20,000 over the past year – to 5.4million.

Of all people in work, 17 per cent were employed in the public sector, the lowest figure since records began in 1999.