UNIONS demanded action from the government today as official figures show the biggest squeeze on public-sector pay for 20 years, with household incomes “obliterated” by the spiralling cost of living.

Office for National Statistics figures show real wages fell by 2 per cent over the year, with public-sector pay particularly hard hit with a 4.2 per cent drop — the largest fall on record.

The figures come as experts forecast that inflation, already at 6.2 per cent, will reach around 9 per cent this autumn.

Darren Morgan, director of economic statistics at the ONS, said: “Basic pay is now falling noticeably in real terms.”

The TUC is demanding that Chancellor Rishi Sunak comes back to Parliament with a package of extra support for families.

TUC general secretary Frances O’Grady said: “Everyone should have the security to be able to pay their bills.

“But household incomes are being obliterated as wages fail to keep pace with the spiralling cost of living.

“We can’t go on like this. The Chancellor must come back to parliament with an emergency budget to help people through this crisis.

“Rishi Sunak should immediately boost the national minimum wage, universal credit and pensions. And he should bring down energy bills by using a windfall tax to fund grants — not loans.”

Public service union Unison said the government “can’t just sit on its hands as people struggle” while the GMB said the figures show that workers need a pay rise.

Institute of Employment Rights director Ben Sellers told the Star: “These latest figures are a big wake-up call, but they are part of a bigger picture where real pay has been eroded for over a decade.”

The ONS data also revealed that unemployment has fallen to 3.8 per cent in the three months to February — the lowest since December 2019 and down from 3.9 per cent in the previous three months.

Nye Cominetti, senior economist of the Resolution Foundation, said: “This month’s labour market statistics showed the pay squeeze deepening, despite unemployment equalling its lowest level in half a century.”

Labour’s shadow chief secretary to the Treasury Pat McFadden said: “Today's figures show that Conservative choices are leaving real wages squeezed and people worse off.”

Chancellor Rishi Sunak said the government is “helping to cushion the impacts of global price rises through over £22 billion of support for the cost of living this financial year.”