London Daily

Focus on the big picture.
Tuesday, Jul 22, 2025

Record wage rises still outpaced by soaring inflation

Record wage rises still outpaced by soaring inflation

Wages are rising at their fastest rate in more than 20 years, but still lag well behind the soaring cost of living.

Regular pay rose by 5.7% in the year to September, the fastest growth since 2000 excluding the pandemic, when people got big rises when returning to work from furlough.

However, when adjusted for rising prices, wages fell by 2.7%.

The cost of living is currently rising at its fastest rate in almost 40 years, largely due to the war in Ukraine.

Energy and food prices have shot upwards, leaving many people struggling to pay their bills.

ManpowerGroup, one of the UK's biggest recruiters, told the BBC that the gap between wages and prices was "putting more and more pressure on households".

The UK unemployment rate rose slightly to 3.6% in the three months to September, up from 3.5% in August, the Office for National Statistics (ONS) said.

However, while this is near a 50-year low, the Bank of England has warned that unemployment will nearly double by 2025 as the UK goes through a tough recession.

On Thursday, Chancellor Jeremy Hunt will set out his plans to get the economy back on track, with spending cuts and tax rises expected.

The Times reported on Tuesday that Mr Hunt and the prime minister will announce a significant rise in the national living wage and target new cost-of-living payments at the poorest households.


Commenting on the latest figures, Mr Hunt said he understood "people's hard-earned money isn't going as far as it should".

"Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday."

But Labour's shadow chancellor, Rachel Reeves, said the UK was paying for "12 years of Tory economic mistakes".

"Real wages have fallen again, thousands of over-50s have left the labour market and a record number of people are out of work because they're stuck on NHS waiting lists or they're not getting proper employment support."

With job vacancies still near a record high and unemployment low, most employers are being forced to put up wages to attract the workers they need.

However, in the year to September, the ONS said pay growth was much stronger in the private sector than in the public sector, at 6.6% versus 2.2% - the largest gap seen outside of the pandemic.

The Resolution Foundation, a think tank focused on improving the living standards of those on low-to-middle incomes, said this was "unsustainable" as it made it harder to recruit and retain public sector staff.

"With public services already stretched and job vacancies already at record highs, it will be hard for the chancellor to deliver a further period of sustained public sector pay restraint," said its economist Louise Murphy, referring to Thursday's Autumn Statement.

The proportion of people neither working nor looking for work also rose again, the ONS said.

Older workers continued to leave the labour market, with the number classed as long-term sick increasing to a fresh record. There was also a drop in the proportion of younger people working, possibly due to recent strikes.

NHS nurses, Royal Mail staff, university lecturers and railway workers have all threatened walkouts as they seek pay rises that are closer to the soaring rate of inflation.

"August and September saw well over half a million working days lost to strikes, the highest two-month total in more than a decade," said Darren Morgan, director of labour and economic statistics at the ONS.


'I'm losing care staff to Amazon'


Josh Hawker says his business has limited scope to boost salaries


Josh Hawker, a director at care home company AbleCare, says the firm has been struggling to recruit for a few months now, despite its overall wage bill rising by 10%,

AbleCare, which runs six care homes around Bristol and South Gloucestershire, is also finding it difficult to retain staff, with carers tempted away by high pay offers outside of the sector that the business cannot compete with.

"I'm getting really fed up with reading resignation letters that say: 'I love my job, I don't want to go, I love looking after the residents but I have to put my family and myself first,'" Mr Hawker says.

"They're getting offers of 20 or 30% higher than we can possibly pay, to go and work at places like Amazon and the big supermarkets. What can you say to them? What can you say other than 'fair enough'?", he says.

The company has done what it can to raise pay, and has started to offer health insurance as an incentive for staff. But facing rising costs, the business has limited room to boost salaries.

Neil Carberry of the Recruitment and Employment Confederation trade group said the latest figures showed the "exceptional growth" in demand for new workers seen this year was at an end.

But he added: "Despite increased levels of employer caution, vacancies are still at historically high levels - it is still a good time to be looking for work. Unemployment remains at record lows, while employment is still below February 2020 levels."

Gareth Vale, director of operations at ManpowerGroup, said falling real-terms wages were hurting households.

"With average total pay... not keeping pace with inflation, some people are looking to work more hours or take on an additional role to supplement incomes to keep pace with rising costs. Employers will need to keep an eye on this in terms of staff wellbeing and the impact it could have on overall productivity and growth."

Newsletter

Related Articles

0:00
0:00
Close
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
×