Andrew Marr accused Boris Johnson of saying “something that isn’t true” when he claimed that wages were increasing in a BBC interview on Sunday. “What you’re also seeing is finally growth in wages,” Johnson told Marr. “After more than ten years of flatlining, what you’re seeing is people on low incomes being paid more.”
What does the official data tell us?
The latest Office for National Statistics (ONS) report notes that in real terms the rate of annual pay growth for regular pay – which excludes bonuses – was 4.5 per cent in May to July 2021. However, the report also says that these numbers should be “interpreted with caution” because they have been pushed upwards by two factors.
First, wages are rising from a very low base caused by the fall at the start of the pandemic. Comparing recent months with such a low base makes the growth rates seem higher than the long-term underlying rate.
Second, pay growth is affected by a fall in the proportion of lower paid and part-time jobs in the economy that, in turn, inflates average earnings. Indeed, the ONS’s data shows that average weekly wages actually fell from £491 in April to £488 in July.
How does UK inflation factor into wage growth?
The claim that wages are growing must also be put in the context of broader constraints on people’s financial situation. The £20-a-week increase to Universal Credit will officially end on Wednesday (6 October), while those on standard tariffs for gas will shortly see bills go up by £139 to £1,277 a year (based on standard household energy use), as a new higher energy price cap comes into effect. This is made worse by inflation rising by 3 per cent in the 12 months to August 2021 – which, if it were to continue, would further eat into people’s pay packets.
Whose responsibility is it that UK incomes continue to falter?
The other thing worth noting is the trend over the past decade. Up until August 2020, wages had remained below pre-2008 levels. While Johnson acknowledges that wages were low during the 2010s, he doesn’t recognise that this occurred under a Tory government, which he supported and was a member of.
Finally, while wages are currently increasing, the rate of growth looks to be stalling. The latest report of 4.5 per cent rate of annual growth in regular pay is lower than the 5.2 per cent figure for April to June. As Johnson looks to make higher wages a central part of his premiership during the Conservative conference this week, it’s important to remember that the huge economic changes during the pandemic have made wage statistics less clear-cut than before.