Although wages in the UK have increased compared to December 2019, it is clear that not everyone has benefited from the same increase. According to a study published on Wednesday, May 4 by the IFS think tank, the average monthly salary of financial workers in February 2022 was 31% higher than in December 2019. Against growth of 14% in all industries is confusing.
Wages are rising “The financial and insurance sectors have reached levels in recent months that have not been seen in the last decade.” at a time when the most modest British households have suffered from rising inflation to a record 30 years. Before the pandemic, “Those who earn with low wages have seen their salaries increase more than those with medium and high wages.” The study is based on data from the UK Revenue Service (HMRC) and the Office for National Statistics (ONS).
This trend also coincides with a decline in the social minimum due to the reduction of the Covid-19 pandemic. “The outlook for low-income households is much bleaker now.” considers the analytical center. This acceleration of finance in any case exacerbates income inequality, while this sector is particularly well represented among the highest wages in the country.
Inequality in finances themselves
Inequality is noticeable in the financial sector itself. According to the study, wage increases are mainly concentrated among the highest earners.
The data may partly reflect an increase in bonuses, which are most often paid in January and February in companies in the sector, but the gap began to widen earlier and “data show that there was also an increase in wages” fixed.
There is no obvious explanation for the acceleration of wages in finance, which is not experiencing a sharp increase in activity or a tougher labor market than anywhere else, according to IFS, even if “Some large banks have reported very large profits, in part as a result of increased mergers and acquisitions during the pandemic.”
Inflation records for 30 years
Inflation reached 7% in March for the year in the UK after 6.2% in February. Or record levels for 30 years according to the National Statistics Office (ONS). In March, food prices were driven by rising food prices, while the conflict in Ukraine has pushed agricultural prices to unprecedented levels, as well as petrol, furniture and even the hotel industry.
This high inflation, combined with rising interest rates that have held back investment, have forced the International Monetary Fund (IMF) to sharply revise its growth forecasts downward. On April 19, the agency said it expects gross domestic product (GDP) to grow by 3.7% this year, down 1 percentage point from January forecasts, and close to British government expectations (3.8%). The GDP forecast for 2023 was reduced by 1.1 points to 1.2%, according to an IMF report.
If this year the country remains at the forefront of the G7 with expected growth at the same rate as in the US, behind Canada (3.9%), then next year the IMF expects a strong brake. The United Kingdom must be behind the G7.
In this context, the Prime Minister of the United Kingdom Boris Johnson assured on Tuesday, May 3, that his government is doing “everything is possible” and “Many more things” to help households cope with rising living costs, with a £ 9 billion (€ 10.7 billion) aid package. However, he acknowledged this “These contributions from the taxpayer (…) will not be enough at once to cover the costs for all.”
However, the leader ruled out the introduction of an exclusive tax on energy companies, which is demanded by the opposition, believing that it would hurt investment, and warned that increasing financial support from the state could accelerate even higher inflation.