David Milliken

LONDON (Reuters – Britain’s lowest-paid workers suffered the most drastic pay cuts over the past twelve months. The figures released Tuesday suggest that this cost-of-living crisis may prove more severe than what headline figures indicate.

British consumer inflation hit an almost 30-year-high of 5.5% in January. Economists predict it will rise to 8.8% in April. The increase in energy tariffs for households has aided by 50% of Russia’s invasion.

The main measurement of wage in Britain, the average weekly earning, is struggling to keep pace. Pay for the three months ending January was 4.8% more than it was a year ago.

However, separate data based on tax returns from employers showed that the pay of the 10% lowest paid staff members – those who earn 8,124 Pounds ($10612) per year – rose just 0.6% in the last year.

However, those who are in the top 10% of income earners (57,900 pounds per year) have received a 4.9% rise while those at the bottom 1% saw a 6.5% increase.

According to the Resolution Foundation, think tank, “These wage trends explain (UK’s) tax revenue-rich recovery. However real wages will also fall faster for those who cannot afford them.”

The difference could be explained by staff furloughs, but the highest earners are still doing well overall since the COVID-19 epidemic. The 8.1% increase in wages for the 10% lowest paid has been compared to the 9.1% gain for the 10% highest-paid.

On April 1, the main wage rate in Britain of 8.91 pounds per hour will increase 6.6% to 9.50 pounds per hour. Many workers also will face an increased tax burden as a result of the new social security taxes.

Graphic: Annual pay growth for UK employees: https://graphics.reuters.com/BRITAIN-ECONOMY/PAY/mopandgjava/chart.png