UK wages decline among worst in Europe

 
Coins in a hand One think tank said this year that the drop in wages was "unprecedented"

Wages in the UK have seen one of the largest falls in the European Union during the economic downturn, according to official figures.

The figures, which were requested by the Labour Party and collated by the House of Commons library, show average hourly wages have fallen 5.5% since mid-2010, adjusted for inflation.

That is the fourth-worst decline among the 27 EU nations .

By contrast, German hourly wages rose by 2.7% over the same period.

Across the European Union as a whole, average wages fell 0.7%.

Only Greek, Portuguese and Dutch workers have had a steeper decline in hourly wages, the figures showed.

Other countries that have suffered during the eurozone debt crisis also fared better than the UK. Spain had a 3.3% drop over the same period and salaries in Cyprus fell by 3%.

French workers saw a 0.4% increase, while the 18 countries in the eurozone saw a 0.1% drop during that period.

'Worse off'

"These figures show the full scale of David Cameron's cost of living crisis," said shadow Treasury minister Cathy Jamieson.

Analysis

These figures, requested by the Labour Party and collated by the apolitical House of Commons library, merely put into firm numbers what we've all sensed for three years or more.

The money left over at the end of each month is getting less and less because our salaries have been flatlining while shopping, petrol and energy bills have been rising steadily.

Politically, this is fertile ground. Ed Miliband talks of a squeezed middle and feeling poorer while the government talks of a nascent recovery that will eventually raise living standards across the board while putting pressure on benefit dependants.

Clamping down on inflation, which has been above its 2% target for four years, doesn't appear to be a priority for the new regime at the Bank of England.

Mark Carney et al say they will tolerate it above target until unemployment falls below 7%. The tolerance of voters might be tested in the interim as their spending power continues to erode.

"Working people are not only worse off under the Tories, we're also doing much worse than almost all other EU countries.

"Despite out-of-touch claims by ministers, life is getting harder for ordinary families as prices continue rising faster than wages."

But the government says it has tackled the higher cost of living by raising the tax-free personal allowance threshold to £10,000, taking 2.7 million people out of tax, and other measures such as freezing fuel duty.

"The economy is on the mend, but we've still got a long way to go as we move from rescue to recovery and we appreciate that times are still tough for families," a Treasury spokesperson said.

BBC political correspondent Ben Wright said: "With an economy that now seems to be gathering momentum, one of the key arguments that Labour have been making for the last two years - the government got this wrong, their economic prescription failed - is no longer as powerful a message at it was six months or a year ago."

"Which is why we are hearing a lot today about living standards."

"Labour think that if a recovery is in place but is not being felt in people's pockets, then it's not going to do the government much good at all," he said.

The GMB union said the government was "directly responsible" for the fall in wages.

"Employers paying low wages get taxpayer subsidies in the form of tax credits to assemble a workforce for them to make decent profit margins," it said.

In June, the Institute for Fiscal Studies said that a third of workers who stayed in the same job saw a wage cut or freeze between 2010 and 2011 amid a rise in the cost of living.

"The falls in nominal wages... during this recession are unprecedented," the IFS said at the time.

In 2009, the average public-sector worker earned about £16.60 per hour, which dropped to about £15.80 in 2011, the IFS said.

Meanwhile, hourly pay for private-sector workers in 2009 was just over £15.10 and dropped to about £13.60 in 2011.

 

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  • rate this
    +5

    Comment number 82.

    Welcome to the Sub Prime Zero Hours employment paradise that is Rip Off Britain.
    Guaranteed low wages, tax payer subsidised skivvying dressed up as "jobs" crap pensions and poor conditions. Zero hours
    Factor in high prices from all the privatised service providers, guaranteed exec bonus pots and there you have it.......tory heaven

    Enjoy.,...

  • rate this
    -7

    Comment number 81.

    not sure why the tone of this article is so negative, surely the whole aim of the "austerity" policy is to lower UK wages and hand UK businesses a costs advantage in the global market. The government and economists will surely be celebrating. Of course it means that fewer British people have the money to buy the things they produce, but that's the non-logic of the consumer capitalist economy

  • rate this
    +1

    Comment number 80.

    The minimum wage was never designed to be a guideline, it is though ,now is the time to bring in new laws that the boss can earn at most earn 10 times the lowest salary then watch wages sore

  • rate this
    +6

    Comment number 79.

    These Tory/UKIP voters on here must be so detached or financially insulated from Working Class Britain.
    You pay less then people will spend less.You further increase an unwillingness to spend if you have an anti working class Tory government who create a sense that we should all be happy with our little pathetic jobs for we could lose them at any moment.

  • rate this
    +6

    Comment number 78.

    65.shabutie - "Why would a company pay a decent wage when the state will make up for it with tax credits....."


    Then add Housing Benefit (working families are the second largest group of claimants behind pensioners) and the Govt's pet child care vouchers scheme.......

    ....those paying income tax are subsidising businesses' profits in more ways than one.....

  • rate this
    -2

    Comment number 77.

    Nothing will change, with any party in power, it's the system of government and elections that has to change to increase accountability and transparency. Policies and mandates have to be replaced by yearly targets and deliverables, 3 year maximum term of office, with candidates who are qualified and experienced in economics, business and social ethics. It's the only way things are going to change.

  • rate this
    0

    Comment number 76.

    I need more information to make sense of this ambiguous statement.

    However, I suspect the average has gone up but the median value has come down because we most certainly are not in it altogether !

  • rate this
    +1

    Comment number 75.

    Nobody seems to mention the elephant in the room - the huge increase in immigration has added hugely to the pool of cheap labour. It's a dream come true for the Conservative government (well, that's how it sees itself!). A huge pool of low-cost labour that far out-strips demand - perfect for employers, bad news for employees.

  • rate this
    +6

    Comment number 74.

    The so called financial crisis and the structure of capitalism and corporate business has given bosses excuses to hold down pay and increase boardroom profits. There has been no protection for workers from corporate greed in the UK. The balance of wealth has been tipped even further towards the few at the expense of the many. In times of increased survival needs, those that can, accumulate ....

  • rate this
    -6

    Comment number 73.

    Fantastic week for the UK???? Oh aye Mo Farah won last night

  • rate this
    +6

    Comment number 72.

    0 Hours, underemployment, stagnant and falling wages and rising food and fuel bills. Economic recovery?, until people see it reflected in their wages no percentage points on Osbornes map of recovery will convice anyone who is struggling that we are out of the woods.

  • rate this
    0

    Comment number 71.

    This is the hangover after the massive spending spree of the 2000's.

  • rate this
    +12

    Comment number 70.

    So where is the suprise?

    High unemployment in the form of job losses, zero hour contracts and low wages are the aim of Tory policy... always has been and always will, except fpr cronies in the IoD and bankers.

    A shameful indictment of Tory attitudes, and the footstool liberals

  • rate this
    +6

    Comment number 69.

    If producers don't pay their staff enough to buy their products where do the people who buy the products get the money from? Just a thought.

  • rate this
    +191

    Comment number 68.

    Gap between rich and poor grows daily.

    I'd vote for:
    Living Wage
    Maximum Wage (no more than 20x lowest)
    Simplified tax system
    Rent control
    Immigration control
    Nationalisation of utilities

  • rate this
    +5

    Comment number 67.

    If "unaffected" people think that the best way to deal with this problem is to pull up the drawbridge and settle down behind well manicured privet hedges, they need to realise that much of the tax they pay is already going to private landlords and their own lives will become more and more focussed on security, as the UK becomes an increasingly desperate and lawless place to live.

  • rate this
    +3

    Comment number 66.

    Business has exploited the minimum wage where nearly all jobs that don't require a degree start at that rate! More rules needed putting in that match a employees skills, knowledge and expertise.

  • rate this
    +36

    Comment number 65.

    Why would a company pay a decent wage when the state will make up for it with tax credits? Most new jobs are at min. wage these days which isn't enough to live on unless you're 17 and still live with mum and dad rent free.

    It's a ridiculous situation, the taxpayer is subsidising the profits that are giving us 'growth' but seeing absolutely no benefit from them.

    It's a scam.

  • rate this
    0

    Comment number 64.

    46 your absolutely right - I wish a person or organisation not necessarily a trade union would call for a protest to beat all protests against this selfish privileged lot who keep spinning rubbish out to the people who are easily fooled like supreme who does not realise that the debt was caused 3/4 by the financial crisis and 1/4 by labour trying to keep us ou of a recession. Tory lies every day.

  • rate this
    +6

    Comment number 63.

    i bet bankers wages havent fallen.

 

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