With soaring energy bills and rising supermarket prices, 2022 has reached inflation levels not seen in 30 years. Borrowing costs are also increasing, while wage growth is struggling to keep up. The office for National Statistics Consumer prices Index (CPI) showed inflation hit 9.1% in May. With staggering facts like this constantly being revealed, accountants across the UK are repeatedly asking the same question… Will Cost of living increases push up wages in accountancy practices?
For most British careers, wages have remained relatively stagnant, which has lead to strikes across schools and national rail. However, the government has used the ‘wage-push inflation’ economic theory to argue against supporting pay increases.
According to the Office for National Statistics, average pay growth without bonuses sat at 4.2% in April – under half the current rate of inflation. This means that Brits’ pay-packets are not keeping up with price rises, therefore harming their purchasing power.
Many believe in wage-push inflation, an economic theory developed in the 70s. Wage-push inflation is the belief that increasing workers’ pay acts as a principal driver of inflation. The thinking is that paying people more money to do work, drives up costs for the business that employs them, and therefore the price of the final product.
The wage-push inflation theory has never been proven in the real world, with the consensus being that prices drove wages rather than the other way around. In 2022, economists think inflation is largely pushed by supply disruptions (such as the ones we have seen due to Covid and the war).
At Totus, we believe that a sure way to save on business costs in 2022, is to co-source with field experts. Co-sourcing reduces staffing costs by up to 40%, whilst still achieving desired results. Bookkeeping and payroll requires specialist knowledge that Totus can provide. We help accountancy firms across the UK save every penny possible to beat the inflation crisis. Why not give us a call today for a free consultation?
