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
    +2

    Comment number 102.

    @EllenSP
    'the huge increase in immigration has added hugely to the pool of cheap labour. It's a dream come true for the Conservative government'

    Who adopted the open door policy that led to the flood of immigration we have seen? IT WAS LABOUR

  • rate this
    +7

    Comment number 101.

    Wild!

    I hope people in Scotland vote to get out of this mess!

  • rate this
    -1

    Comment number 100.

    GB is in massive debt. Started by Thatcher and taken on by all governments after that. The Tories in power now are, useless as they are are in the same boat Labour, or any other party would be in. Our country needs to borrow to survive....when that crashes we are all back to the stone age. Thank goodness I left 13 years ago.

  • rate this
    +14

    Comment number 99.

    Over the last 10 years in the engineering manufacturing sector, my workload has increased 3 fold to the point where my doctor told me to give up work and it was killing me, I told him I obviously couldn't. To add insult to that I've had a 7k pay cut to the point where I'm literally working myself to death for pence. 20 years experience, 5 years of study and i'm basically a slave

  • rate this
    -1

    Comment number 98.

    Under New Labour, taxes and increased costs cut the value of my salary by a third. What we're experiencing now is a boom by comparison.

    For Ellen SP- who let the immigrants in ? Oh yes, Labour, because they'd made up so many cushy non-jobs in the public sector, there was no one left to do any actual work.

  • rate this
    +65

    Comment number 97.

    Its as clear as day. Make no mistake, the government is out to ring-fence the elite, and by attrition, destroy the working classes. So if you are a child not born into money the writing is on the wall for you. Educate yourself all you like, the dice is loaded against you. Your future has been decided, and your unborn children are already in debt to the state. Where is the Labour Party? Like mice.

  • rate this
    +6

    Comment number 96.

    If things get worse there will be no more issues of overpopulation. Nobody will want to come here and people will leave in greater numbers.
    We will end up with the ethnicity in Britain that the BNP wants.

    But of course the rich will be untouched by any of this.

  • rate this
    +15

    Comment number 95.

    My last CEO give himself a £384K bonus when the rest of the workforce were on a pay freeze! Obviously, some are more equal than others.

    There has been a trend to drive down wages and employees terms and conditions for over a decade now. Rule by fear seems to be the new mantra!

    The UK really has to find a new niche?

  • rate this
    +6

    Comment number 94.

    We all have to tighten our belts.
    But I can't afford a belt.
    Will a length of string do, Gideon?

  • rate this
    +5

    Comment number 93.

    Cameron's giant Corporate donors are the cause of low pay. Like preying mantis, they make huge profits out of us all. I'm a partner in a small company that, in common with most of UK's 4.4 million small to medium sized businesses, has lost money during the last two years. UK's small companies can't afford to pay better salaries, because we and our staff are crushed by the corporate giants.

  • rate this
    +6

    Comment number 92.

    Anyone see the TV programme this week about Germany. They work less but produce more and of better quality!
    They also have a much better quality of life.
    I wonder where Britain goes so wrong

  • rate this
    +3

    Comment number 91.

    Everytime you read about a company squeezing wages, but still recording big profits, this is because they "have to maximise value for their shareholders." If the government and tax system was prepared to support co-operatives then the workers would be the shareholders and this type of short termism would disappear.

  • rate this
    -5

    Comment number 90.

    We lost 5% of our wage while lots of people in other EU countries lost their jobs. I know which I prefer.

  • rate this
    +2

    Comment number 89.

    Unsurprising news, but I would like to know what Labour would do, on this issue, and on just about every other issue that they are totally silent on.

  • rate this
    +5

    Comment number 88.

    The Tories are completely out of touch with 'hard working families' doing the 'right thing' 'making work pay' with a 'fair benefits system'. This is slave labour in a society where you work until you die with nothing to show for it and those caught in the vice can simply drop dead. Note to Labour Party....WAKE UP AND SPEAK FOR THOSE YOUR SUPPOSED TO REPRESENT!!!!!!!!

  • rate this
    +1

    Comment number 87.

    With a rise of third world immigration into the UK competing for jobs at the lowest wage possible employers have no incentive to better the wage in a surplus employee market. This does not always mean competition for the the most menial work but for manufacturing jobs as well. Why aren't migrants heading for Bangladesh rather than the EU and UK? One guess.

  • rate this
    +1

    Comment number 86.

    It will only get worse. The ones with the power are the rich, they use their money to lobby governments in every country in the world. We know it goes on and we certainly know MP's only act in their own interests. If everyone didn't go to work tomorrow the economy would crash, and I'm talking about just working and middle class. You are workers slaving for people who constantly screw you.

  • rate this
    -6

    Comment number 85.

    As bad as it looks, I think the silver lining is that if indeed wages are lower compared to those elsewhere, we have become more competitive vs. other economies who have been slower to adapt, and hopefully that'll give us an edge in terms of future investment. As a workforce, we need to be able to compete with China and India, who have access to far cheaper labour.

  • rate this
    +5

    Comment number 84.

    The Conservative Party was created by the rich to look after the interests of the rich, so why should anyone be surprised. IMO the working class people that fall for the Tory lies and vote them in are equally to blame for the mess we are now in.

  • rate this
    +2

    Comment number 83.

    It has become a serious problem because it is now easier and more profitable to not work than it is to work.

    I ran a recruitment drive last week - people apply on the government system so they can keep signing on. We then invited over 100 people to interviews, 8 people turned up - no joke.

    You can't give minimum wage jobs away!

 

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