The Battle of Work & Wallets: UK and France Under Inflation's Relentless Siege

In the age-old battle between wages and inflation, a new twist has been added courtesy of the COVID-19 pandemic. The latest data from 2022, collected from around the globe, paints a rather bleak picture. The numbers are in, and the verdict is that inflation is outpacing wages by a significant margin, with those in the lower-income bracket feeling the squeeze more acutely than others. The purchasing power of minimum wages is losing ground, and the crisis has exposed a worrisome erosion of real wages. It's something I'm often asked about by friends in the UK relating to France and vice versa by friends in France about the UK. As I'm someone who gets to see this both sides of the channel (and in fact across Europe with my job) I wanted to share my non-inflation adjusted 2 cents.

Inflation's Hefty Bite into Wages

The cost of living is spiralling upward. Usually, this isn’t news. However, the pace at which prices are rising is striking fear and anxiety in the hearts of lower-income earners. These families typically allocate the lion’s share of their earnings to essentials, such as groceries, rent, and utilities. When the costs of these goods and services ascend the financial staircase, their disposable income evaporates faster than a puddle in the desert sun.

COVID-19's Triple Whammy

The pandemic raged across the world, leaving behind an economic storm in its wake. With lockdowns, business closures, and lay-offs, wage employees found themselves financially crippled. According to data from 30 countries across various income levels, the average wage employee lost the equivalent of six weeks' worth of wages in 2020-21. Here's the triple whammy: women, low-paid workers, and those in the informal economy were hit the hardest.

Minimum Wages: Losing Battle Against the Inflation Tide

Over 90% of ILO Member States have minimum wage systems in place. This might seem like a silver lining, but the real value of minimum wages is eroding under inflation's unrelenting tide.

UK's Stormy Seas: Navigating Double-Digit Inflation

In the United Kingdom, families and workers had grown accustomed to belt-tightening during the pandemic. But now, even as the world tries to bounce back, they find themselves in stormy seas. The UK’s inflation rate remained in double digits at 10.1% in March, slightly down from 10.4% in February (at 8.6% as I write this article). While other Western European countries have somewhat milder inflation rates, Britain stood alone with double-digit figures.

What’s alarming is that this isn’t an isolated spike. The inflation rate has been stubborn, and it reached a 41-year high of 11.1% in October. Families feel this acutely, especially when shopping for groceries – food prices soared by a staggering 19.2%, the highest in 45 years.

With whispers from the Bank of England suggesting interest rates heading toward 5%, there are concerns about what this means for mortgages, loans, and dreams of financial stability.

France's Frugal Ballet: Dancing Around Single-Digit Inflation

Here, across the busy water of the Channel, the situation in France and the rest of the eurozone is slightly less severe, but still troubling. Inflation in the eurozone eased to 6.9% in March (5.1% here in France as I write this). Although this is a relief compared to the UK, it still takes a significant toll on monthly budgets for households and workers.

Like their counterparts in the UK, people in France see most of their earnings evaporate on essentials like food and utilities. In the eurozone, food, alcohol, and tobacco prices were around 15.5% in March. However, energy prices in the eurozone dropped by 0.9% year on year, giving some breathing room.

The Job Market in Quicksand: A New Battlefront

Adding another layer to this economic turmoil is the strain on the job market. According to the International Labour Organization (ILO), the global employment growth is expected to hit only 1.0% in 2023. The economic slowdown forces many to accept lower-quality jobs with poor pay, often without security or social protection.

This has severe repercussions for social justice. It amplifies inequalities that were already worsened by the COVID-19 crisis. With high inflation and low growth - a stagnation reminiscent of the 1970s - productivity and labour market recovery are threatened.

Job seekers, especially women and young people, face increasingly difficult paths. Globally, women’s labour force participation rate stood at 47.4% compared to 72.3% for men. Young individuals aged 15-24 struggle even more with an unemployment rate three times that of adults.

With people accepting lower-paying jobs and the cost of living skyrocketing, more individuals are at risk of being pushed into poverty. This is a dire situation for both the UK and France, as well as the rest of the world.

Defending the Wallet and Upholding Dignity

For families, workers, and everyday individuals, the struggle continues. Governments and central banks face the Herculean task of balancing interest rates while stimulating the economy and shielding the vulnerable.

It's about making every penny count, advocating for policies that protect purchasing power, and fostering resilience in the face of economic headwinds.

As we navigate these tumultuous times, let’s remember that this isn’t just about figures and percentages - it’s about lives, dreams, and dignities at stake. In the stormy seas of inflation and job market uncertainties, may the wallets and spirits of the countless hardworking individuals find safe harbour.