Inflation deflates wage increases

Research by tax specialists RIFT Tax Refunds has revealed that while inflation is more than wiping out wage growth across the UK, there are four G10 nations with a far worse level of real wage growth.

RIFT analysed the current rate of real wage growth based on the increase seen in earnings versus the current rate of inflation across each G10
nation to reveal how the UK is currently performing on a global basis.

The figures show that actual wage growth is currently at 6.4 per cent across the UK, the second highest of all G10 nations behind Belgium.

However, while inflation has eased from the 41 year high seen in October of last year, it remains at a notable 10.5 per cent.

This is the highest current rate of inflation of all G10 nations and means that real wage growth in the UK is currently -4.1 per cent.

While all G10 nations are currently home to negative real wage growth, it’s Belgium that is faring best in the current global economy.

While the rate of inflation across the nation is currently 8.1 per cent, it’s also home to the highest rate of actual wage growth at 7.1 per cent, meaning the deficit between the two sits at just -1 per cent.

The United States (-1.2 per cent), Switzerland (-1.7 per cent), Canada (-2.1 per cent), Netherlands (-2.8 per cent) and Japan (-3.5 per cent) also rank above the UK in this respect.

While the current rate of inflation in Germany is comparatively lower than the UK at 8.6 per cent, the nation has seen a -5.7 per cent reduction in actual earnings, with the balance between the two the worst of all G10 nations at -14.3 per cent.

Even Russia is faring better than Germany on this basis, with the rate of real wage growth at -11.5 per cent.

Sweden and Italy are home to some of the highest current rates of inflation outside of the UK at 12.3 per cent and 10.1 per cent respectively.

With both nation’s also home to low rates of actual wage growth, they also rank as some of the worst countries when it comes to the rate of real wage growth.

In Sweden real wage growth is currently -9.3 per cent, while in Italy it’s -8.6 per cent.

France is the only other G10 nation with a worse wage growth to inflation ratio than the UK. Wages have crept up by 0.9 per cent across France while inflation is at 6 per cent, resulting in a balance of -5.1 per cent.

Chief executive of RIFT Tax Refunds, Bradley Post, said: “The economic landscape is gloomy, to say the least, and while UK inflation has eased in recent months, it remains the second highest rate when compared to all G10 nations.

“So despite the fact we’ve also seen some of the strongest levels of wage growth in the G10, we currently sit in the bottom half when it comes to the level of real wage growth.”

 

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