Real pay, calculated by adjusting money wages for changes in prices, acts as a measure of the purchasing power of average earnings. If real earnings fall, people (on average) can buy fewer goods and services whereas if real earnings rise, people can buy more.
A number of steep falls in real pay have been seen since the 2008 crash, and despite a significant rise in average real pay in mid-2018, this has flattened out since January 2019, suggesting these increases have now petered out.
This has meant that between April 2016 and April 2019, the average total real earnings increased by only 0.2% and average regular real earnings increased by 1.5%; approximately £1 and £7 per week respectively. As of April 2019, average weekly pay was £502, or £532 including bonuses, an annual salary of £26,176 or £27,740 with bonuses.
As average figures, there are variations in workers’ experiences, by pay level, location, and different occupations. The latest figures from the Office of National Statistics (ONS) show that the highest gains have been seen in the Finance and Insurance industries (with a 7% increase) whereas a number of industries with mainly public employees (such as health, education and so on) experienced significant cuts (ranging from just under -4% to almost -7%.)
In total, five ONS industries had gains of more than £1,000 per year in real terms since 2008, whereas eight industries experienced losses of more than £1,000 per year.
Erik Porter, Acting Chief Executive of The Money Charity said “We believe that a fundamental part of everyone managing their money well is budgeting, and for many people, that just means getting to grips with our outgoings and trying to keep these within the limits set by our income. However, if incomes themselves are struggling to maintain pace with the rising costs of outgoings, this presents an additional challenge in maintaining a realistic and sensible budget.”
“Widespread disparities in workers’ experiences and situations add further complications into aspiring towards financial wellbeing, pushing people towards unsustainable financial options in order to simply make ends meet.”