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Britain has suffered one of biggest drops in the real value of wages among members of the Organisation for Economic Co-operation and Development.
Arthi Nachiappan www.thetimes.co.uk
Real pay, which is the value of incomes after adjusting for the impact of inflation, is on course to fall by 2.9 per cent from 2021 to 2022, compared with an average of 2.3 per cent across the bloc of 38 countries.
The figures from the OECD showed that during the pandemic the UK suffered one of the biggest declines in the rate of employment among the members of the population with the least education qualifications. The rise in economic inactivity, when a worker is neither working nor looking for a job, among those with lower educational qualifications was one of the highest recorded.
The UK was one of a “handful” of countries in which employment among workers aged 55 or over was still below pre-crisis levels at the start of the year, the organisation said. Hundreds of thousands of older workers left the labour market in Britain during the pandemic.
The gap in employment rates between white people and people of ethnic minority backgrounds has widened by 0.5 percentage points since the start of 2019. The trend was recorded in several countries. In the six largest European countries, the impact of rises in food and energy prices was 50 per cent higher for the poorest fifth of people than for the richest.
Inflation, which hit a 40-year high of 10.1 per cent in July, is at more than 15 per cent for the poorest people, three times the level among the richest, according to analysis by the International Monetary Fund. This is the second most unequal rise in the cost of living of any European country.
Economists at Goldman Sachs said inflation could exceed 20 per cent in January before the announcement of the new energy bills support package on Thursday, which could shave several percentage points off the headline rate.
Mathias Cormann, the OECD secretary-general, said: “Despite widespread labour shortages, real wages growth is not keeping pace with the current high rates of inflation. Governments should implement targeted and means-tested measures to temporarily support the poorest households.”