London’s Top Earners Reaped Biggest Pay Raises Since Start of Pandemic

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(Bloomberg) — London’s highest earners have reaped the biggest pay raises since the start of the pandemic, widening the gap between the richest and poorest people in the UK for the first time in two decades, an influential research group found.

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The Institute for Fiscal Studies said average earnings for workers in the capital have increased 5% to £4,400 ($5,646) a month before tax since February 2020. That’s almost double the 2.7% national average.

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The highest pay raises went to those working in business services including finance, accounting and law, which are concentrated in London. And even in the capital, its the highest earners that did the best. The median income — those in the middle of the distribution — went up just 1.7% to £2,700 a month, according to the IFS.

The figures indicate that wage inflation, a major concern for the Bank of England, is concentrated in the highest-earning professions. It also helps explain why Britain is suffering the worst series of strikes since the 1980s, with lower-paid workers from junior doctors to train drivers and nurses demanding higher pay.

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“Top earners in London have pulled away whilst middle earners have seen little pay growth, leading to an increase in earnings inequality within London,” Xiaowei Xu, a senior researcher at the IFS, said in a report Tuesday. The increase for those on more modest pay “is low by both national and historical standards.”

Those working in energy, administrative support services, professional and technical posts had the highest pay raises. Real estate agents, government administration and those in education had among the lowest.

Places near the capital including Cambridge, Essex and Surrey enjoyed increases comparable to those in London. Most of the weakest areas were further outside London and the South East.

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