Wages fall at record levels

Wages fall at record levels
Friday, 01 May 2009 21:45

The Office for National Statistics (ONS) has reported that weekly earnings have fallen by 5.8 per cent in February 2009.

This is the biggest drop since 2001, and on the back of a decline of 1.9 per cent in January

Not suprisingly, bonuses in the financial sector were hardest hit and accounted for a significant proportion of the fall. Other sections of the economy, including manufacturing and leisure, also suffered as a result of falling bonuses.

Elsewhere wage freezes and cuts in the private sector played a part in the sigificant reduction.

However, commentators suggest that the size of the fall could be explained by the large number of private sector pay settlements that are concluded in the opening months of the year and suggested that some increases would be reinstated later.

John Philpott, chief economist at the Chartered Institute of Personnel and Development, took a gloomier view, though. He said: “Bonuses have virtually dried up in the private sector this year as employers cut costs and staff try to hold onto their jobs. Add the arrival of price deflation into the mix, and the chances are that growth in regular pay (excluding bonuses) will also show signs of a further marked slump in the coming months.”

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