Wages growth in the UK has just over taken inflation for the first time in 2 years according to this BBC News Report
In August 2023, the latest month for which data is available, wages grew by 7.8% on average compared to just 7.1% for inflation.
The average annual inflation figures for the last three years have been:
- For 2021 - 2.5%
- For 2022 - 7.9%
- 2023 So far - approximately 9%
And the minimum wage increase have been roughly on par with that, just about keeping up.
- 2% From April 2021 to April 2022
- 6% from April 2022 to April 2023
- 9% from April 2023 until April 2024.
So any increase in the minimum wage has just about allowed people to keep up with the increasing cost of living, assuming they are earning enough to cover their basics!
Which I worked out yesterday IS NOT THE CASE
So there is something of a lag going on, and this increase in wages is going to have to continue for a good year to offset money lost to debt to keep people going over the last few years!
A simple equation...
While this is welcome news, and will be a relief for many, this clearly benefits higher income earners more than lower income earners.
For example...
- If you're earning ?20k A year, then a 10% increase = ?2000 extra.
- If you're earning ?40K a year, a 10% increase = ?4000 extra.
And the thing with the recent cost of living increase which has affected the really basic things in life: fuel, housing, food, transport.... that ?2K a year extra gained from the increase in the minimum wage (roughly equivalent to ?20K a year, just under) has been 100% sucked up by the increase in cost of these basics.
However for someone on double the wage experiencing the same increase, they've had the choice of either spending their extra income for leisure or building up a buffer!
I think we need the next Minimum Wage increase to be well ABOVE inflation to make up for this difference.
People need some breathing space to catch up.
Then again, maybe that would just kick start price inflation again.
What a mess, but that's the economy for you, I guess!
