Support 100 years of independent journalism.

Boris Johnson’s claims about wage growth: debunked

The Prime Minister told Andrew Marr UK wage growth is improving – but Britain’s data authority is considerably less confident.

By Freddie Hayward

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.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. A handy, three-minute glance at the week ahead in companies, markets, regulation and investment, landing in your inbox every Monday morning. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

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.

Content from our partners
How automation can help insurers keep pace with customer demand
How telecoms companies can unlock their growth potential through automation
The pandemic has had a scarring effect on loneliness, but we can do better

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.

[See also: Rishi Sunak’s speech is a big gamble for him and the Conservatives]