The CEBR (Centre for Economic and Business Research) reported that banking and insurance workers have secured inflation-busting rises along with lawyers, accountants and professional service staff, mainly among those working in London’s financial district. The financial consultancy described the figures as depicting a “tale of two labor markets” where “the highest earners now enjoy an annual pay rise of 10 per cent, while the lowest earners see a rise of just 1 per cent. Breaking down monthly pay data into income groups, he said official data sources showed the bottom 10% had diverged from the top 10% after a two-year period during the pandemic when they converged. Nina Skero, chief executive of the consultancy, said that while the minimum wage increase would have boosted the incomes of many low-wage workers, the figures showed that many others had not been able to benefit. A rise in the national minimum wage of 6.6% in April was likely to be offset by a fall in the number of hours worked by low-wage earners. Skero said the bottom 10% of workers were lagging well behind headline inflation of 9.4% and would suffer more than other groups if the consumer price index rose to 13%, as the Bank of England predicted in its latest forecast. He said: “Two dominant but opposing narratives have emerged. One focuses on the significant bargaining power workers wield as they take advantage of the tight labor market to negotiate record wage increases and generous bonuses. “The other shows the decline in wages after inflation is taken into account and provides plenty of anecdotal evidence of working people struggling to make ends meet.” The central bank said last week it was raising interest rates to 1.75 percent to combat the perception that inflation is becoming endemic, prompting workers to demand higher wages in the coming months. However, the CEBR report and official figures show that the staff most able to get a pay rise are on the doorstep of the central bank in the Square Mile. According to official figures showing the breakdown of workers’ wages by sector, staff in the finance and insurance sector were paid 10.6 per cent more than a year ago, compared with 1.4 per cent in the arts, leisure and entertainment. A number of industries that have suffered chronic staff shortages increased weekly wages, including the construction and hospitality sectors, pushing average annual increases to 6.2%. City law firms, accounting firms and companies aligned with the science and pharmaceutical sectors have also paid above-average pay increases to attract and retain staff. CEBR reported that during the bonus season in February and March, City banking staff received salaries and bonuses that increased by almost 20% overall compared to the previous year. “Earnings growth for the highest paid 1% took off sharply in early 2022,” the report said. “In the UK, many of the highest earners are concentrated in jobs in the City of London, typically in the financial, professional and technical sectors. Average pay in these industries showed particularly strong growth in 2022, with annual growth in finance and insurance peaking at 19.8% in February and remaining well above 10.0% in the latest figures.” Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Professionals, science workers and IT workers also saw wage growth at the highest level in February at 12.7%. “These wage increases reflect strong recent performance in the industry and the fact that workers in these industries typically receive performance-related bonuses that represent a significant share of total compensation,” the report adds. Official figures last month showed that after taking inflation into account, average pay including bonuses fell by 0.9% in the year from March to May 2022. Excluding bonuses, pay adjusted for the Office for National Statistics’ preferred measure of inflation – the consumer price index including housing (CPIH) – fell by 2.8%, the biggest drop since records began in 2001.
