‘Double whammy’ of inflation rise and slow wage growth to hit workers

Employers are being called upon to support workers as the double whammy of inflation rises and slowing wage growth starts to take hold.

Campaigners have said the impact may be so severe that employees may be forced to chose between ‘eating or heating.

According to the Office of National Statistics reported a 30-year inflation high with the Consumer Prices Index (CPI) beginning at 0.6% in the last month of 2020 before hitting 5.4% in December 2021.

The institution stated that the increase was led by the rise in prices of food and non-alcoholic drinks last month, as well as the heightened costs of the restaurant, hotel, household and clothing sector.

Another significant contributor to the 12-month inflation rate is from housing and household services such as gas and electricity tariffs soar, not eased by the supply chain disruption post-pandemic.

But employer bodies have said this will compound existing problems in the UK labour market – hitting poorer households most.

Katherine Chapman, director of the Living Wage Foundation, said: “The news that inflation had reached a three-decade high is a cause for concern for us all.

“But for the millions of workers still trapped in low paid and precarious work, this will mean workers and families making tough decisions like choosing between heating their homes or eating.

“That’s why a real Living Wage is more important than ever.”

This record inflation arrives in the context of ongoing challenges presented by a post Covid world which has significantly impacted the job market.

Companies are struggling to fill in the job vacancies following the ‘great resignation’ which has sparked a paradox between competitive salary wars and shortages of skilled employees.

Charles Cotton, senior policy advisor at the CIPD, said ‘financial well-being’ policies should not be overlooked by companies to retain talent in the current challenging job market.

He said: “Just as we started to see the end of the coronavirus pandemic, the UK’s great cost of living crisis starts to come into view – bringing with it a new source of stress and anxiety for us all, and a new impetus for employers to support our wellbeing.

“While the past few months have seen large increases in wages for some UK workers, these have been focused in certain occupations and economic sectors.

“For most, pay rises will have been moderate, while many of those in the public sector are experiencing a ‘pause’ in their pay.”

He explained: “The financial wellbeing approach should look at the activities that the organisation can undertake to help reduce the risk of someone falling into poverty or suffering ill health due to money worries.

“For example, it should outline the organisation’s commitment to paying a fair and liveable wage, and the support available to those who do fall into difficulties, such as financial education, credit counselling or hardship loans.”

Frances O’Grady, the TUC general secretary believes Downing Street must prioritise offering a plan to solve the rising price of living.

She said: “Families are facing a double hit from high inflation and slowing wage growth. They need more help from the government.

“The Chancellor must come forward with a plan to tackle the cost-of-living crisis. Working people need stronger rights to bargain for fair pay increases. And families need more help with rising bills through universal credit.”