Britain’s private sector workers are suffering the slowest pay growth in nearly four years – even as their public sector counterparts enjoy ever higher wage increases.
Wages for business employees rose by 4.4 per cent in the three months to August compared to the same month last year, the weakest since December 2021.
But bumper pay settlements for the public sector saw their salaries go up by 6 per cent, the strongest for more than a year.
The figures are likely to draw consternation among the four-fifths of the UK workforce who are employed in the private sector.
Their bosses are likely to have been constrained by Labour’s decision to hike employer national insurance, which makes it more costly to hire workers.
Many will have had to pass on the cost by putting a lid on wage growth.
Public sector pay is growing much faster than in the private sector
That is likely to have been a major factor in the slowdown for private sector pay increases, which were running at more than 6 per cent at the end of last year.
In contrast, Labour has rewarded its public sector union backers with above inflation pay hikes – despite the parlous state of the public finances.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, said: ‘The gap between pay set by the labour market in the private sector and those areas where the government is setting pay seems unsustainable.
‘This is a function of government ramping public sector awards and the minimum wage at the same time as taxing away pay rises in the private sector through its national insurance raid.’
Overall wage growth across the economy slowed to 4.7 per cent, the weakest since 2022. It comes as the cost of living is increasing more steeply – with inflation at close to 4 per cent.
When taking into account inflation, the ‘real’ rate of wage growth has slowed to a paltry 0.9 per cent, the weakest in two years.
Charlie McCurdy, economist at the Resolution Foundation, a think-tank, said: ‘Real weekly wages have grown by just £1.50 in total since last September – barely enough to cover the cost of a Greggs sausage roll.
‘The deteriorating labour market, coupled with persistently high inflation, means that cost of living pressures are likely to build over the autumn.’
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