Report finds finance workers win 20% pay hike as lowest-paid see wages flatline
A ‘tale of two labour markets’ has emerged in recent months with the highest and lowest earners experiencing pay growth on separate ends of the scale.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Finance and insurance workers have enjoyed pay rises of up to 20% while the lowest earners have seen their wages flatline amid the worsening cost of living crisis, according to a new report.
A “tale of two labour markets” has emerged in recent months with the highest and lowest earners experiencing pay growth on separate ends of the scale, research by the Centre for Economic and Business Research (CEBR) found.
The highest earners saw their pay rise by 11% on average in March while the lowest-paid workers’ pay grew by just 0.9% in the same period.
City of London workers, where many of the UK’s highest earners are concentrated, have enjoyed pay rises far higher than 99% of the nation’s workforce, the report showed.
Year-on-year pay increases for finance and insurance workers peaked at 19.8% in February while professional, scientific and technical sector employees saw wage growth spike 12.7% in the same period.
The report said such significant wage increases could be explained by a well-performing sector and workers in these industries often being paid bonuses linked to performance.
Inflation reached 9.1% in May and the top 1% of earners saw their pay increase at the same rate, meaning their real pay growth was zero.
But the lowest 10% of earners saw pay growth hit just 1.3%, reflecting the diminishing spending power of lower-paid households whose wages are not keeping up with the rising cost of living.
Nina Skero, chief executive of the CEBR, said: “With inflation ranging from 5.5% to 9.4% over the first half of 2022, even the pay rises seen at the top end of the scale mean many workers’ real pay growth is close to zero, but of course the most worrisome is the picture which emerges for lower earners.
“They are seeing exceptionally low pay growth, making it entirely unsurprising that there are so many stories emerging of families making impossible choices, for instance between cutting down on food consumption or falling behind on mortgage payments.”
Around 16 million people cut back spending on food and essentials in April to late June, a report by the Office for National Statistics found on Friday.
While 51% of the population, which amounts to around 24 million people, used less gas and electricity during the same period as energy costs surged.
Variation in wage growth between different income groups is expected over time, but the least well-off workers are experiencing stagnating pay at a time of “extraordinary” price rises, the CEBR said.
The economic researchers added that additional support needs to be targeted at the poorest households to avoid worsening hardship.