Real wages fell by 1% between December 2021 and February 2022 as pay struggled to keep up with increasing inflation, according to the Office for National Statistics (ONS).
Regular weekly wages, excluding bonuses, increased by 4% between December 2021 and February 2022, but when adjusted for inflation actually dropped compared with the year before.
This was despite record job vacancies, which hit 1.3 million in January to March 2022.
The hit to workers reflects growing living costs, including hikes in national insurance contributions and energy bills.
Pat McFadden, shadow chief secretary to the Treasury, said the figures show that “Conservative choices are leaving real wages squeezed and people worse off”.
“At a time like this, Rishi Sunak could have chosen a one-off windfall tax on huge oil and gas company profits to cut household energy bills by up to £600,” he said.
“Instead, he’s decided to make Britain the only major economy to land working people with higher taxes in the midst of a cost of living crisis.”
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The chancellor said his government is “helping to cushion the impacts of global price rises through over £22 billion of support for the cost of living this financial year”.
“We’re also helping people to find new jobs, and ensuring work always pays as this is the best way to support households in the longer term,” he added.
He said the data shows the “continued strength of our jobs market”, emphasising that the number of employees on payrolls went up again in March and unemployment has fallen further below pre-pandemic levels.
The annual rate of inflation hit a new 30-year-high of 6.2% in February and the Bank of England is expecting it to reach 8% this year, which will only worsen the impact on Britons.