Wednesday 26 October 2016 12:50 pm

Living wage boost secures inflation-busting pay rises

Pay packets grew for only the second time since the financial crisis last year, as low-paid workers earned a bumper pay boost as a result of the new national living wage (NLW).

Across the UK, pay rose by 2.2 per cent in the year to April 2016, the Office for National Statistics (ONS) said this morning. After accounting for inflation, pay in real terms grew by 1.9 per cent – marking the second consecutive year of growing purchasing power since 2008.

Earnings for the bottom five per cent of the income ladder jumped by 6.2 per cent, the ONS found, while pay for those in top jobs such as management and professional services was up by less than two per cent on average. 

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The pay squeeze in the public sector also continued, with those employed by the state seeing salaries up by 0.7 per cent, compared to a 3.4 per cent jump in the private sector.

While the NLW appears to have delivered a clear boost for the lowest paid workers, the ONS also found that 362,000 employees across the UK were still paid less than the legal minimum. Hairdressers were most likely to be paid under the minimum wage rates, with 7 per cent falling short, while women were also more likely than men to fall short. The ONS, however, said this could be accounted for by other payments in kind, such as employer-provided accommodation which they do not track, adding that the numbers do not correlate to levels of compliance by bosses.