Millions of workers’ real-terms pay has been cut as the cost of living crisis worsens and inflation rises.
Figures show the average employee is £260 a year poorer because salary rises in three months to November lagged behind inflation of 5.1%. The wage squeeze comes on top of soaring energy bills and looming tax rises.
Inflation is set to hit a huge 8% in April, while private sector workers can expect just a 5.3% pay increase. For those in the public sector, it's considerably worse, with wages going up by just 2.4% on average.
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Those working in manufacturing are seeing around a 2.8% pay increase, while for those in construction it is 2.9% - according to figures from UK financial service Hargreaves Lansdown.
On top of this, National Insurance will rise by 1.25 percentage points, and this will affect everyone under state pension age earning more than £9,880 from wages. The size of this tax hike doesn’t sound dramatic, but that doesn’t translate into a 1.25% rise in what you pay.
Someone earning £30,000 currently pays £2,452 a year in NI, and the rise would increase it by £256. That’s effectively a rise of over 10% in their NI bill. Everyone who pays NI will take a hit, but for those whose finances are on a knife edge, this could be a devastating blow.
TUC General Secretary Frances O’Grady said: “Working people deserve a decent standard of living and a wage they can raise a family on. But instead, following the worse pay squeeze for two centuries, real pay is falling, and they now face a cost-of-living crisis.”
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