In a recent report by the Organisation for Economic Co-operation and Development (OECD), it has been revealed that Britain is the only European G7 country experiencing a decrease in real wages despite workers in Germany, France and Italy seeing improvements.
According to the OECD figures, the average real income in Britain dropped by 0.6% between July and September as inflation took a toll on purchasing power. On the other hand, the average growth in real income across OECD countries was 0.2%. Incomes in France experienced the largest boost in purchasing power with a 0.8% increase.
The high inflation rate in the UK was cited as the main culprit for the drop in household spending power, with inflation reaching 8.7% in the three months to September, compared to 8.5% in Germany, 8.4% in Italy and 5.9% in France.
The Office of National Statistics (ONS) reported that the UK is currently experiencing the largest loss of purchasing power since the 1970s oil crisis. Public sector workers have been most affected by the inflation, though those in the private sector have also seen a decline in real-terms earnings.
The OECD report also highlights that the UK is among a few countries where real household income per head has yet to surpass pre-pandemic levels, with real household income per capita dropping by 3.9% since 2019. The Czech Republic, Denmark, Finland, Portugal, and Spain are also facing similar challenges in recovering real incomes from the pandemic.
These reports put additional pressure on the Bank of England and Rishi Sunak to curb the ongoing inflation. Sunak has made it a priority to halve inflation this year. The findings of the OECD and ONS come at a time when Britain is facing another wave of strikes, triggered by the inflation, over pay and working conditions in the public sector.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.