As the Office for National Statistics has reported this morning:
- Annual growth in regular pay (excluding bonuses) was 7.8% in June to August 2023, similar to recent periods and one of the highest regular annual growth rates since comparable records began in 2001.
- Annual growth in employees' average total pay (including bonuses) was 8.1% in June to August 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June, July and August 2023.
- Annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers' housing costs (CPIH)) for total pay rose on the year by 1.3% in June to August 2023, and for regular pay rose on the year by 1.1%.
- Annual average regular pay growth for the public sector was 6.8% in June to August 2023 and is the highest regular annual growth rate since comparable records began in 2001; for the private sector this was 8.0% and among the largest annual growth rates seen outside of the coronavirus (COVID-19) pandemic period.
- The finance and business services sector saw the largest annual regular growth rate at 9.6%, followed by the manufacturing sector at 8.0%; this is one of the highest annual regular growth rates for the manufacturing sector since comparable records began in 2001.
Not that the Bank of England will see it that way. They will (wholly incorrectly) see this as a sign of new inflationary pressure. As the Guardian reported yesterday of comments made by Huw Pill, its chief economist :
Pill said the fact that the headline measure of the cost of living was now falling was not enough to claim victory.
Speaking at an event in London, the Bank official – one of nine members of Threadneedle Street's interest-rate-setting monetary policy committee – said persistent price pressures had to be met with a persistent response.
He was, of course, warning that rates might rise again.
The glint of hope that this wages data might supply has to be dashed, according to the sadists at the Bank of England. And so the march to recession goes on.
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The perils of looking at rates of change.
The relevant data are median wage level and CPI level rebased to (say) 2019.
I don’t know the numbers but I suspect real pay had declined and the recent data suggest a modest catch up.
Very modest
Exactly right re rates of change, Clive. It is disturbing that BoE bankers seem to have no understanding of such elementary statistics.
Note the Guardian no longer has commentary from readers on economic articles. I assume, maybe uncharitably but I suspect not, this is because readers routinely trashed the articles, in doing so displaying far more economic nous than all the writers put together. Again, nothing lefty about the Guardian, Britain’s corrupt and unequal status quo seeming to be what it really watches over.
The Guardian is becoming ever more illiberal as the years pass by.
I notice that they have now sacked Steve Bell, accusing him of deploying antisemitic tropes in one of his cartoons, which seems to be the way to ‘de-platform’ pretty much anybody on the left these days. It’s not the first time they’ve spiked Bell’s work and I’ve noticed in the past that the comments sections haven’t been opened on some of his cartoons if they were casting scorn on news items backed by the Guardian editorial line or were supportive of Corbyn (back when he was still a major political figure).
It is pretty concerning that the only ‘serious’ left-wing newspaper in the UK has been moving ever-rightwards for years on economic issues but remains very far to the left on social issues. I generally find myself far to the left of their economic stance but a bit to the right of them on social issues and I feel I am a pretty liberal kind of guy in this regard already!
The newspaper remains a useful source of information and has interesting articles which wouldn’t get near publication in the rest of the mainstream media, but I am left uncomfortable by the direction of travel.
The descent of The Guardian to the level of neoliberal/Establishment lapdog is very disappointing.
It has not been helped by the fact that disastrous financial decisions have been made in recent years, such as going to the “Berliner” size before reaching “tabloid” form.
And appointing unsuitable editors.
Hello Richard,
Now that the Bank of England will see it that way -> Not* ?
Angus
Yes
Changed
Huw Pill – a crusader for the rich if there ever was one.
A bitter Pill to swallow!
Pill och – he is a priest & does what all priests do – consults his sacred books and …. makes people poorer. There is no reasoning with the man & his theology – he “knows” he is right. If the Uk is ever to recover (economically), then many/most of the people in the BoE and Treasury need to be removed from their positions.
I’ve watched a few of the (heavily managed) Q&As that the BofE runs on Zoom with Pill, the Chief Economist I’m afraid they confirm every prejudice that you might have about how he thinks. That complacent ‘you’ll have to accept being poorer’ comment was in completely in character.
NOT ( not now) that the Bank of England will see it that way
Thanks
I am definitely trying to do too much this morning…
I hope the calculations have factored out the pay of company officers, which have seen staggering pay rise compared workers at the front.
“Average pay rises in finance and insurance has been “exceptionally strong”, peaking at 19.8 per cent in February [2022] and remaining well above 10 per cent in the latest data.” The Independent, 8 August 2022
Source: https://www.independent.co.uk/news/business/wages-cost-living-bankers-bonuses-b2140503.html
“The average FTSE 100 CEO received £3.91m in 2022, up from £3.38m in 2021, according to the latest research. The 16% rise in executive pay comes at a time of increasing economic difficulty in many households in the UK”, The Institute of Chartered Accountants, 31 Aug 2023
Source: https://www.icaew.com/insights/viewpoints-on-the-news/2023/aug-2023/executive-pay-rises-amid-costofliving-crisis
I am sure they have not factored that out
I looked through the ons release and it appears to be be a mean average that doesn’t correct for hours worked.
So it could all be explained by a few big rises and more hours worked.
All in all, pretty useless
Median hourly pay is what we need to know.
Agreed
It has also been heavily distorted by one off payments in the NHS
Thank you, Richard and readers, Bill in particular.
@ Richard: Have you ever come across economists associated with the left, trade unions etc. interested in the Bank of England chief economist position. The reason I ask is in my years as a banking lobbyist, whether in London or Brussels, I rarely came across trade union / wider labour movement activists and any engagement on such matters. If there was anything, it was from the likes of you. It was as if Whitehall and Brussels were no go areas for working people. Needless to say, the likes of me and one particular firm, whose name I won’t mention as people start screaming prejudice, are permanently camped there. When insider sympathisers tipped off trade union leaderships about issues and offered to assist in the shadows, there was rarely interest.
@ Bill Kruse: The Grauniad changed ownership circa 2008, after a debt for equity swap and years of mismanagement, including office moves, change of printing press and opulent workstyles. It’s ultimately owned by financial institutions by way of the Caymans. Donations from readers and protection money from Bill Gates are handled by way of a charitable arm based in tax efficient Delaware.
The Grauniad’s take down of Corbyn was much motivated by the interests of its investors. As above, when insider sympathisers offered to help, Corbyn’s team were not interested in fighting back.
To my question, no, because they know they would not be considered
Thank you, Richard.
I guessed as much.
A dozen plus years ago, on the fringe of some Commission event in Brussels, I suggested to ETUC and TUC representatives that they set up shadow monetary and even financial stability committees and publicise output around the same time as the ECB, BoE, ITEM Club and even City AM’s shadow monetary policy committee. They must have wondered if I had been consuming too much of the free champagne early.
Thank you, Mike.
@ Richard and readers: Do you think the Treasury should be broken up and lose of its seats at the cabinet table? FWIW, I think it should and an update to what George Brown led be resurrected.
I think BoE (operational) independence should and can easily be rescinded.
If like Robin Stafford and I, you have worked in the City, you will have a low opinion of modern banksters, including the talking heads on the airwaves. Some may work in trading etc., but they have little knowledge of and interest in political economy. The economics departments are little better. Rachel Reeves (HBOS) and Ruth Kelly (HSBC) and Kitty Usher are typical. (I met Usher in 2008. I got the impression her relatives Harriet Harman, Virginia Bottomley and Jeremy Hunt helped.)
I wrote my masters dissertation on CBI in 1995 and opposed it then, seeing little evidence to support the idea. Having worked on prudential and macro-prudential regulation, when at the bankers’ association, from 2008 – 12 and at the investment fund side from 2012 – 4, I think of updating the masters. I still oppose CBI.
I would have a ministry of tax, a finance ministry and a ministry of economic development.
It is staggering that Kelly and Ussher were once Labour ministers.
Thank you, Richard.
That’s even better. Economic development no longer sits well with whatever that department in Victoria Street is called. I lose track of what the old DTI is called and does.
I’m sure Charmer would love the pair back.
CBI? Presumably not the Confederation of British Industry?
Thank you, CH.
CBI = Central Bank Independence
Good idea to get rid of the CBI, too. Another bunch of uninformed and uninterested so and sos. Now producing Labour MPs.
Colonel Smithers, Qui moi? what did I do?
Jokes aside, indeed time for funadamental change – get rid of the priests, 99 theses nailed to the door of the BoE & lets move into the real world. I support Richards proposals. Makes sense. They could do worse than mimic the Chinese central bank and the industrial planning the chinese do.
As for Usher – I see that she was in a film – “The Fall of the House of Usher” – not sure if Harriet Harman, Virginia Bottomley and Jeremy Hunt were in it – but the Tories will do anything for a bob ot two these days.
This is a bit off the wall but: https://www.youtube.com/watch?v=8UAsN9wvePE
It is not about design. minutes 27 and 33 are very very interesting & I have circulated to Commission compardres. Yes the chap is somewhat irritating – but the content is compelling and resonated with me in my dealings with EU institutions (which doubtless one could extend to UK institutions).
Call me cynical, but I’ve long believed that one of the motives for raising interest rates in these circumstances is to ensure that the banking sector gets a bigger share of national wealth. After all, if you’re the governor of the Bank of England (or one of their senior economists), you’ll want to see the nation’s most important and successful businesses grow their profits — as well as their reserves to allow even more lending while interest rates are high. A warm and comforting thought for any central banker, especially if they ever have to fall back on a career amidst the cut and thrust of the London laundromat.
But perhaps I should be more charitable and less cynical.
I share your cynicism
As do I. Seems to be right on the money, as it were. (I know. Couldn’t help it.)
Indeed.
Higher rates sucks spending power from one substantial group of people…. hence reducing demand and inflationary pressure. But higher rates are received by some – (mainly) wealthy savers and banks that don’t “pass on” higher rates to savers and keep it for (eventual) distribution to (mainly wealthy) shareholders.
(Note. It’s the differential propensity to save that reduces demand: rich people don’t spend additional income, most can’t spend what they don’t have).
So, higher rates DO work… but with a ‘byproduct’ being a trickle UP of wealth.
Tax achieves the same reduction of spending power, can be directed more precisely and therefore more likely to have a redistributative impact.
No surprise which the bankers prefer.
Accepted. They work. But they are an exceptionally blunt instrument.
“But higher rates are received by some – (mainly) wealthy savers and banks that don’t “pass on” higher rates to savers and keep it for (eventual) distribution to (mainly wealthy) shareholders.
(Note. It’s the differential propensity to save that reduces demand: rich people don’t spend additional income, most can’t spend what they don’t have)”.
That would be true, until you remember that the major beneficiaries are the commercial banks and dealers, not directly through ‘wealth savers’; but directly through the payment of interest on CBRAs. This money, like the QE from which the reserves came (now collateral, because as a matter of demonstrable truth evidenced beyond challenge by the Financial Crash, the Treasury can’t trust the banks) does not circulate in real economic activity, but is siphoned off into the hands of “wealthy savers”; reinforcing and increasing their wealth, and creating an unproductive asset bubble, changing precisely nothing save the wealth of the select few selected by financial sector insiders. That is how it works. And this dictates our politics.
It always did. Two centuries ago it was the publicly funded emancipation of the slaves; used by the biggest and most influential slave owners to switch the resources made available; but then it was in creating the industrialisation and infrastructure that transformed Britain.
The IFS now seems to be following your long established lead on the likelihood of recession.
I took part in a discussion with former Tory MP, Angela Knight on Times radio last night. She accused me of being libellous for saying that the Bank of England wished to create a recession. She had, however, before that said that the whole purpose of raising interest rates what was to reduce demand. As I pointed out, that date inevitably created the risk of recession, or even indicated the desire for it. She refused to get the point, as she did on a number of issues. The exchange was more heated I expected.
Thank you, Richard.
She was my boss from 2008 – 12. She’s an engineer by trade and doesn’t understand much of this. There are many like her in politics and officialdom, including foreign policy, which part explains how the current crisis is spinning out of control. We had to manage her. Nice person to work for, though.
Mike Parr and Robin Stafford will also recognise her type.
Richard, Congratulations on your Debate Night performance last night. At last some BBC SCOTLAND viewers are hearing the truth from someone who theoretically doesn’t have an iron in the fire. Scotland needs to become independent to save itself – and possibly wake up England to recognise its own demise.
Thanks