New data saw the wages of the highest paid payrolled employees soar by just under £3,000 a month since 2014 – while the poorest got a paltry pay rise of £167

The biggest earners in the UK saw their monthly pay increase from £10,891 per calendar month in 2014 to £13,770 per calendar month in December 2021 – a 24% increase, while those on lowest incomes saw their pay increase by a mere £167 per month in the same time period.

Employment data from the Office for National Statistics found that the lowest 10% of payrolled employees were earning £672 a month compared to £505 in 2014. 90% of payrolled employees earn less than £4,797 per month. Only 1% earn more than £10,981 per month.

This means that the highest payrolled employees take home, on average, £13,098 per month more than the lowest paid. 

Those in the second highest (95th) percentile who were earning £5,269 a month in 2014 saw their monthly pay packets increase to £6,559, or by 24%, in December 2021. 

While those in the 25th percentile saw their pay increase by 30%, their wages started lower and have remained low: in 2014 they were on £887 per month and now bring home £1,166 a month. Payrolled employees in the 50th percentile earned £1,600 per month in 2014 and are now on £2,025 per month – more than £10,000 less than the highest earners. 

The data comes as the UK faces a cost of living crisis, with households facing a perfect storm of rising energy costs and increases in food prices.

The OECD found that the UK has the highest rates of income inequality in the European Union

It also follows years of wage stagnation for the ordinary British worker – before the COVID-19 pandemic hit, average wages had only just returned to where they were 12 years before.

The 15 years from 2007 to 2022 are forecast to be the worst on record for household incomes which were up just 9% during that period, compared with a pre-financial crisis average of almost 50% per 15 years.

Before Russia invaded Ukraine, UK inflation levels were already concerningly high, with the Bank of England predicting that it could reach 7% by April. Now, the war threatens to exacerbate inflation rises, with some experts warning that it could soon hit 10%


Wealth and Poverty

Rising inequality following more than a decade of austerity has already pushed 1.8 million children into the ‘deepest poverty’, meaning that they live in households that are unable to cover the most basic needs.

This is an increase of half a million over the past decade, with 4.3 million children in total living in poverty. Of these, 49% are in single parent households. 

Around four million households in England are classed as ‘fuel poor’, as are 25% of households in Scotland, 12% in Wales, and 18% in Northern Ireland.

Even before Russia’s invasion of Ukraine caused more fuel insecurity, energy costs were set to soar and push a further two million homes into fuel poverty. 

But, while the poorest families struggle to choose between food and fuel, income inequality continues to rise and is higher now than it was in the 1960s and 1970s. The OECD found that the UK has the highest rates of income inequality in the European Union. 

In 2019/20, 42% of all disposable household income in the UK went to the fifth of the population with the highest household incomes. In contrast, only 7% of all disposable household income went to the lowest-income fifth. This figure was based on disposable income before housing costs have been deducted and means that income inequality in 2019/20 was 35% before housing costs and 39% after housing costs.

A couple without children with disposable income below £264 per week before housing costs were in the 10% of people with the lowest household incomes in 2019/20. To be in the highest-income 10%, a household required an income of at least £1,070 per week.

Look beyond income at wealth, the equality gap is even starker.

The wealth gap ballooned during the Coronavirus pandemic, with the richest 10% gaining £50,000 in wealth during the crisis. This dwarfed those with lower incomes and asset wealth: adults in the richest 10% of households now have an average wealth of £1.4 million each thanks to that £50,000 gain, while the poorest 30% of households gained an average of just £86 per adult in additional wealth.

The wealth increase was in part explained by higher earners more likely to be able to work from home, save money due to cancelled holidays, fewer days and evenings out, and rising house prices. Lower-paid workers were more likely to be furloughed and were hit hardest by job losses

Low-paid furloughed workers also didn’t see their pay topped up while on furlough. This means that, although their jobs were protected, because furlough only covered up to 80% of earnings, those on the lowest pay saw their incomes fall below the minimum wage – more than two million people were not being paid the legal minimum wage in April 2020.

People who lost income during the pandemic and were therefore entitled to Universal Credit were given a £20 uplift of the benefit during the height of the pandemic. However, that £20 was cancelled in October last year, putting even greater pressure on deprived households at a time when the cost of living continues to rise… and rise.

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