Real term wages have continued to slump in the UK, according to The Money Charity’s January 2018 Money Statistics report. The Office for National Statistics (ONS) found that real term regular pay fell by 0.4% between August and October 2017.
This follows similar decreases over most of 2017. The last time average regular real-term pay increased was in February 2017 (by 0.1%). The fall in real term pay is a worrying trend, essentially meaning that more and more people are receiving less income compared to inflation. With inflation hitting 3.1% in November 2017, it is likely that without a significant fall in living costs, and a rise in the average wage of a UK worker, the purchasing power of peoples’ wages will decline further.
The effects of falling wages may be affecting other statistics reported by The Money Charity in the January 2018 report. The total amount of credit card debt in November 2017 hit £70bn, up £2.1bn on last year, an average of 4,563 people contacted Citizens Advice with debt problems every day in November, up by 241 per day on last month.
Such a significant and sustained fall in real wages is concerning, and there is a strong possibility that it will have a prolonged impact on people’s ability to afford basic living costs, avoid problem debt and grow their savings.
Steph Hayter, Acting CEO of The Money Charity says:
“The fall in real term wages is a concern for us. Workers need to be paid enough to be able to keep up with the rising costs of living, and be able to save some amount of money for any unforeseen financial shocks. The effects of the decline in wages appear to be felt in the money advice sector, with more enquiries for debt advice charities. This is a pivotal time for us to improve people’s financial capability through the work we do to help people make the most of what they have”
Other key points from the January Money Statistics:
- 5% reduction in the number of loans approved for house purchases over the year
- The average interest from a cash ISA increased by 0.06% compared to last month
- 4,563 people contacted the Citizens Advice Bureau a day in November 2017, up 241 per day on the previous month