UK wages will be at their lowest level since 2006 next year, the report says | Daily News Byte

UK wages will be at their lowest level since 2006 next year, the report says

 | Daily News Byte

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London
CNN

Brits hoping for a New Year’s pay rise to offset rising food and energy costs may be disappointed.

According to PwC, the average British worker’s salary is expected to return to 2006 levels in 2023 when inflation is taken into account. Real wages, which factor in inflation, are expected to fall by 3% in 2022 and another 2% in 2023, PwC predicted in a report on the UK economy shared with CNN.

The report confirms that wages in Britain have stagnated even as inflation has reached double digits, creating the worst cost-of-living crisis in decades. It has led to widespread strikes across the UK economy, including railways, schools, nurses, hospitals and the postal service.

On Friday, passport officials began an eight-day strike that is expected to hit some of the United Kingdom’s busiest airports over Christmas and New Year, including Heathrow and Gatwick in London. The government said in a statement that the military would support the Border Force but warned travelers to expect delays and disruptions on arrival in Britain.

“2022 has obviously been a very challenging year for the UK economy, and it is not surprising that these headwinds will continue into 2023,” PwC senior economist Barrett Kupelian said in a statement.

The report offered some hope. Despite the impact on wages, more than 300,000 UK workers could rejoin the labor market in 2023, reducing economic inactivity and addressing staff shortages in high-skilled sectors, according to PwC. At the same time, increased immigration to the UK could directly contribute £19 billion ($23 billion) to the economy, boosting GDP growth by 1% “even as the economy as a whole contracts,” PwC said.

“Despite a contracted economy, the UK remains an attractive destination for workers,” PwC economist Jack Finney said in a statement. UK immigration levels are set to reach a record 1.1 million in 2022, with resettlement programs aimed at Ukrainians, Afghans and Hong Kong residents, according to PwC.

Nurses demonstrate outside the Royal Marsden Hospital in London, UK, on ​​December 15, 2022, during what is expected to be a month of strikes by public service workers.

Even with record immigration, the United Kingdom lags behind developed countries in its post-Covid employment recovery. Vacancies hit a record 1.3 million at the start of the year, falling to just under 1.2 million in November. Worker shortages have been particularly acute in the hospitality, retail and agricultural industries.

Research published this week by the House of Lords Economic Affairs Committee has concluded that early retirement is the biggest driver of pressure on the UK workforce. Rising long-term illness, lower EU migration after Brexit and an aging UK population have also played a role.

“Rising unemployment poses serious challenges for the UK economy. Labor shortages exacerbate the current inflation challenge; harm growth in the near term; and reduce the revenue available to finance public services, while demand for those services continues to grow,” the committee said. was

PwC’s Kupelian added that UK inflation is likely to peak in October and “start to gradually return to target over the next two years.”

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