Wages are rising at their fastest rate in more than 20 years, but still lag well behind the soaring cost of living.
Regular pay rose by 5.7% in the year to September, the fastest growth since 2000 excluding the pandemic, when people got big rises when returning to work from furlough.
However, when adjusted for rising prices, wages fell by 2.7%.
The cost of living is currently rising at its fastest rate in almost 40 years, largely due to the war in Ukraine.
Energy and food prices have shot upwards, leaving many people struggling to pay their bills.
ManpowerGroup, one of the UK’s biggest recruiters, told the BBC that the gap between wages and prices was “putting more and more pressure on households”.
However, while this is near a 50-year low, the Bank of England has warned that unemployment will nearly double by 2025 as the UK goes through a tough recession.
On Thursday, Chancellor Jeremy Hunt will set out his plans to get the economy back on track, with spending cuts and tax rises expected.
The Times reported on Tuesday that Mr Hunt and the prime minister will announce a significant rise in the national living wage and target new cost-of-living payments at the poorest households.
Commenting on the latest figures, Mr Hunt said he understood “people’s hard-earned money isn’t going as far as it should”.
“Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make on Thursday.”
But Labour’s shadow chancellor, Rachel Reeves, said the UK was paying for “12 years of Tory economic mistakes”.
“Real wages have fallen again, thousands of over-50s have left the labour market and a record number of people are out of work because they’re stuck on NHS waiting lists or they’re not getting proper employment support.”
With job vacancies still near a record high and unemployment low, most employers are being forced to put up wages to attract the workers they need.
However, in the year to September, the ONS said pay growth was much stronger in the private sector than in the public sector, at 6.6% versus 2.2% – the largest gap seen outside of the pandemic.
The Resolution Foundation, a think tank focused on improving the living standards of those on low-to-middle incomes, said this was “unsustainable” as it made it harder to recruit and retain public sector staff.
“With public services already stretched and job vacancies already at record highs, it will be hard for the chancellor to deliver a further period of sustained public sector pay restraint,” said its economist Louise Murphy, referring to Thursday’s Autumn Statement.
The proportion of people neither working nor looking for work also rose again, the ONS said.
Older workers continued to leave the labour market, with the number classed as long-term sick increasing to a fresh record. There was also a drop in the proportion of younger people working, possibly due to recent strikes.
NHS nurses, Royal Mail staff, university lecturers and railway workers have all threatened walkouts as they seek pay rises that are closer to the soaring rate of inflation.
“August and September saw well over half a million working days lost to strikes, the highest two-month total in more than a decade,” said Darren Morgan, director of labour and economic statistics at the ONS.
‘I’m losing care staff to Amazon’
Josh Hawker, a director at care home company AbleCare, says the firm has been struggling to recruit for a few months now, despite its overall wage bill rising by 10%,
AbleCare, which runs six care homes around Bristol and South Gloucestershire, is also finding it difficult to retain staff, with carers tempted away by high pay offers outside of the sector that the business cannot compete with.
“I’m getting really fed up with reading resignation letters that say: ‘I love my job, I don’t want to go, I love looking after the residents but I have to put my family and myself first,'” Mr Hawker says.
“They’re getting offers of 20 or 30% higher than we can possibly pay, to go and work at places like Amazon and the big supermarkets. What can you say to them? What can you say other than ‘fair enough’?”, he says.
The company has done what it can to raise pay, and has started to offer health insurance as an incentive for staff. But facing rising costs, the business has limited room to boost salaries.
Perhaps the starkest number contained in the latest employment figures is the record gap between pay rises in the private and public sectors.
At 2.2%, public sector pay rises are languishing well behind the 6.6% pay rises seen in the private sector and will add to simmering industrial tensions which have already seen nurses vote for strikes for the first time ever. Today’s record gap will be seized on by unions representing public sector workers.
The number of vacancies – while still high – fell for the fourth month in a row which suggests that employers are scaling back their hiring intentions as they become gloomier about the prospects for the economy.
But what is most baffling to economists is that the size of the potential workforce continues to shrink. Some have left the country after Brexit, many are choosing to stay in education, but the increase in the over-50s who are unwilling or unwell enough to work continues to rise despite the rising economic pressures on household incomes.
Neil Carberry of the Recruitment and Employment Confederation trade group said the latest figures showed the “exceptional growth” in demand for new workers seen this year was at an end.
But he added: “Despite increased levels of employer caution, vacancies are still at historically high levels – it is still a good time to be looking for work. Unemployment remains at record lows, while employment is still below February 2020 levels.”
Gareth Vale, director of operations at ManpowerGroup, said falling real-terms wages were hurting households.
“With average total pay… not keeping pace with inflation, some people are looking to work more hours or take on an additional role to supplement incomes to keep pace with rising costs. Employers will need to keep an eye on this in terms of staff wellbeing and the impact it could have on overall productivity and growth.”
Sniffer dogs in Ecuador have found 6.23 tonnes of cocaine hidden in a banana shipment, police say.
The dogs alerted their handlers, who seized 5,630 parcels filled with a white substance that later tested positive for cocaine.
The shipment was destined for Germany, officials said, and would have been worth $224m (£173m) had it reached its destination.
Five people had been arrested following the discovery, according to the prosecutor-general’s office.
Police said they had found the massive cocaine haul during a routine inspection of container stored at Posorja deepwater port south-west of Ecuador’s largest city, Guayaquil.
The cocaine parcels had been hidden beneath crates of bananas destined for export.
One of those arrested in connection to the drug discovery was a representative of the export company responsible for the shipment, whom prosecutors said had been present at the inspection and gave officials the names of the four other suspects.
They include the managers of the banana plantation where the cocaine is suspected to have been added to the fruit shipment, as well as the driver who took the container to the port.
Ecuador has become a major transit country for cocaine produced in neighbouring Peru and Colombia, with transnational criminal gangs using Ecuador’s ports to ship the drug to Europe and the US.
Last year, Ecuadorean security forces seized more than 200 tonnes of drugs, most of it cocaine. Only the US and Colombia seized more drugs in 2023.
Gangs have caused a wave of violent crime in Ecuador, leading President Daniel Noboa to declare a state of emergency and deploy tens of thousands of police officers and soldiers in an effort to combat them.
These security forces have stopped large amounts of cocaine from being shipped to Europe.
In January, officers found the largest stash ever to be seized in Ecuador – 22 tonnes of cocaine – buried in a pig farm.
However, extortion, kidnappings and murders remain high in the Andean country.
Thailand has expanded its visa-free entry scheme to 93 countries and territories as it seeks to revitalize its tourism industry.
Visitors can stay in the South-East Asian nation for up to 60 days under the new scheme that took effect on Monday,
Previously, passport holders from 57 countries were allowed to enter without a visa.
Tourism is a key pillar of the Thai economy, but it has not fully recovered from the pandemic.
Thailand recorded 17.5 million foreign tourists arrivals in the first six months of 2024, up 35% from the same period last year, according to official data. However, the numbers pale in comparison to pre-pandemic levels.
Most of the visitors were from China, Malaysia and India.
Tourism revenue during the same period came in at 858 billion baht ($23.6bn; £18.3bn), less than a quarter of the government’s target.
Millions of tourists flock to Thailand every year for its golden temples, white sand beaches, picturesque mountains and vibrant night life.
The revised visa-free rules are part of a broader plan to boost tourism.
Also on Monday, Thailand introduced a new five-year visa for remote workers, that allows holders to stay for up to 180 days each year.
The country will also allow visiting students, who earn a bachelor’s degree or higher in Thailand, to stay for one year after graduation to find a job or travel.
In June, authorities announced an extension of a waiver on hoteliers’ operating fees for two more years. They also scrapped a proposed tourism fee for visitors flying into the country.
However some stakeholders are concerned that the country’s infrastructure may not be able to keep up with travellers’ demands.
“If more people are coming, it means the country as a whole… has to prepare our resources to welcome them,” said Kantapong Thananuangroj, president of the Thai Tourism Promotion Association.
“If not, [the tourists] may not be impressed with the experience they have in Thailand and we may not get a second chance,” he said.
Chamnan Srisawat, president of the Tourism Council of Thailand, said he foresees a “bottleneck in air traffic as the incoming flights may not increase in time to catch up with the demands of the travellers”.
Some people have also raised safety concerns after rumours that tourists have been kidnapped and sent across the border to work in scam centres in Myanmar or Cambodia.
The prospective new owner of Royal Mail has said he will not walk away from the requirement to deliver letters throughout the UK six days a week, as long as he is running the service.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the BBC.
Mr Kretinsky has had a £3.6bn offer for Royal Mail accepted by its board.
Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it goes ahead.
Currently the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week throughout the country for the same price. But questions have been raised over whether the service could be reduced in the future.
In an exclusive interview with the BBC, Mr Kretinsky also said he would be willing to share profits with employees, if given the go-ahead to buy the group.
However, he appeared to reject the idea of employees having a stake in Royal Mail, which unions have called for in exchange for their support.
The Royal Mail board agreed a £3.6bn takeover offer from Mr Kretinsky in May for the 500-year-old organisation, which employs more than 150,000 people. Including assumed debts, the offer is worth £5bn.
But because Royal Mail is a nationally important company, the government has the power to scrutinise and potentially block the deal.
As well as keeping the new government on side, Mr Kretinsky also faces the task of convincing postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is required by law to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How well this has actually been working in practice is a different matter. Ten years ago, 92% of first class post arrived on time. By the end of last year it was down to 74%, according to the regulator Ofcom.
Last year the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be watered down. It wants to cut second class letter deliveries to every other weekday, saying this will save £300m, and lead to “fewer than 1,000” voluntary redundancies.
‘Unconditional commitment’
Mr Kretinsky has committed in writing to honouring the USO, but only for five years.
And after that, in theory, the new owners could just walk away from it.
However, Mr Kretinsky told the BBC: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this”.
Another potential stumbling block for the deal, however, is how the company will be structured.
Unions would like to see the company renationalised, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the BBC that would be “difficult in the current political and economic environment”.
Instead, what the CWU is pushing for is “a different model of ownership” – that is, where the employees part-own the business.
To get its support for the takeover, the union wants employees to share ownership of the company, along with other concessions including board representation for workers.
It says profit sharing is “not going to be enough to deliver our support and the support of the workforce”.
If the union doesn’t get what it wants, it won’t rule out industrial action, Mr Ward said. Its members went on strike in 2022 and 2023.
Although Mr Kretinsky said he is “very open” to profit sharing, he is not in favour of shared ownership.
“I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity.
“For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.”
Mr Kretinsky said he didn’t want to create “some anonymous structure” but instead “remunerate the people who are working for the company, and creating value for the company”.
The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts.
Mr Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions but only until 2025.
“If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”
He said if the management, union and employees work together, “we will be successful”.
Another concern is the potential break-up of the business.
The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss.
Mr Kretinsky has promised not to split off GLS or load the parentcompany with excessive debt, although borrowings will rise if the deal goes through.
But he has a way to go to convince the CWU.
“I can’t think of any other country in the world that would just just hand over its entire postal service to an overseas equity investor,” Mr Ward of the CWU said.
However, Mr Kretinsky said that the postal unions “do understand that we are on the same ship, and that we need this ship to be successful, and that if we are there, we don’t have any real problems to deal with, because the sky is blue, and it’s blue for everybody.”
The union cannot stop this deal but the government can block it under the National Security and Investment Act.
Business Secretary Jonathan Reynolds has said he will scrutinise the assurances and guarantees given and called on Mr Kretinsky to work constructively with the unions.
Mr Kretinsky may say that he and the unions are ultimately on the same ship but, as things stand, they are not on the same page.
Who is Daniel Kretinsky?
Daniel Kretinsky started his career as a lawyer in his hometown of Brno, before moving to Prague.
He then made serious money in Central and Eastern European energy interests.
This includes Eustream, which transports Russian gas via pipelines that run through Ukraine, the Czech Republic and Slovakia.
He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United.
The Czech businessman is worth about £6bn, according to reports.