Friday, January 24, 2014
Another way of showing real wages have stopped falling
Posted by David Smith at 08:45 AM
Category: Thoughts and responses

The government has claimed that real take-home pay is rising for most workers (in the 2012-13 tax year), when the rise in the personal tax allowance is taken into account. It is a reasonable riposte, and it is likely - given lower inflation - that real take-home pay for most will be stronger this year.

There is another way of demonstrating that the squeeze on real wages has ended. Total wages and salaries, in Table J1 here show 12-month rises of 3.7% and 3.3% respectively in the second and third quarters of last year.

Adjusted for the 12-month rise in employment (0.8% and 1% respectively), that converts into per employee increases of 2.9% and 2.3% respectively, broadly in line with inflation. A different message from the weekly earnings figures, but one that fits in better with the consumer spending and other data.