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
    +1

    Comment number 582.

    Oh God.
    The body calling itself "the Institute for Fiscal Studies" uses 2011 figures in its report. What a shame.
    As well as for the lad calling himself a "shadow Treasury minister".
    As well as for the lads calling themselves "the GMB union".
    Does it mean the only way for all of them to get information about British workers' pay is to go to "the House of Commons library" and read figures of 2011?

  • rate this
    +5

    Comment number 581.

    It makes you wonder how much worse this would have been with a Tory majority

  • rate this
    +11

    Comment number 580.

    Wonder if it could be anything to do with UK companies outsourcing to countries like India and China rather than employing UK citizens in the UK?

  • rate this
    +3

    Comment number 579.

    Poor wages subsidised by our taxes increase the profits of company shareholders while multiple ownership of homes leads to house prices becoming unaffordable, which in turn requires more of our taxes to pay housing benefit to to landlords who use our money to pay off their mortgages. The government should buy up properties by borrowing by way of mortgage and then own the properties after 25 years.

  • rate this
    +4

    Comment number 578.

    180. pete
    “Thatcher would have loved this news”.

    ...& so will Tony Blair – he’s done alright for himself.
    Under the last Labour watch, Tony’s Cronies did very well for themselves at the expense of others at the opposite end of the wages spectrum, & even threw in crate of tax loop holes for good measure.
    Labour ceased to be the party of the Working Man a long time ago.

  • rate this
    +2

    Comment number 577.

    With High levels of unemployment here in the UK why are the BBC not challenging this appalling level of discrimination against our own citizens?

    http://forum.gazeta.pl/forum/w,36953,137573295,137573295,Praca.html

  • rate this
    +2

    Comment number 576.

    The reality is that the inevitable consequences our dysfunctional banking system with their ability to money out of thin air is coming home to roost. Until this nettle is grasped we are heading downhill all the way http://bit.ly/16QbCHj

  • rate this
    -3

    Comment number 575.

    I live in the Algarve in Portugal. What people in the UK need to understand is that wages here in Portugal are significantly lower than in UK. A typically hourly rate for an unskilled or semi skilled person is only 7 euros, ie :- £5.50 an hour max, so wage costs need to reduce to remain competitive

  • rate this
    +4

    Comment number 574.

    275. Schacht

    having lived in Germany (like you) what you say is absolutely true, given the choice i would love angela merkel and the christian democrats take over..

    who do people honestly believe would care more for the masses dave and the old etonians or AM and the CDU

    i know who would get my vote ..!

  • rate this
    +2

    Comment number 573.

    The thing that makes me chuckle about articles like this and peoples responses to it, is that those berating the 'complainers' are invariable the first to cry foul when it is them up that is the creek and insist that whatever help is available, is not enough for them to maintain the life they deserve. Try walking a mile in another's shoes and get a feel for their life, before passing judgement.

  • rate this
    +2

    Comment number 572.

    Jim I think you will find that these "lefties" as you call them are actually "righties", UKIP are an extreme right wing xenophobic party, the left has always been socialist and inclusive only the right want to segregate people on grounds of race and colour. Hitler was a conservative amongst other things we all know but his propaganda is not far short of UKIP and some people on this site.

  • rate this
    +24

    Comment number 571.

    I get £6.70 an hour for £30 hours week a work, I've asked for 2 years for more but no way, so I have to claim £22.47 Working Tax Credits to get to the living wage. My private firm rakes in the profits whilst the government "subsidises" me with WTC! Why not make the company pay me a LIVING wage of £7.45 hr? I'm off benefits, BUT maybe that would upset the SHAREHOLDERS of the private company?

  • rate this
    +18

    Comment number 570.

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

    THIS.

    I just do not understand why the witch hunt of the poor, the sick, the disabled, the unemployed can continue with such venom from all sections of society, yet they are absolutely fine with multi national corporations taking far more.

  • rate this
    +4

    Comment number 569.

    Try living on a company pension (enforced early retirement) with no hand-outs and no prospects of a job because of age.

  • rate this
    +3

    Comment number 568.

    554.Eezzen

    No matter who is in power the working man will always get shafted!
    ====
    As, not doubt, will his misses.

  • rate this
    +16

    Comment number 567.

    Austerity, wage freezes & no pay rises clearly isn't working, but I hold every British Government for the last 30 odd years responsible for the irreparable damage they have done to the UK and it's workers. They have let us all down.

  • rate this
    +107

    Comment number 566.

    Jobs should be made to pay a living wage, what good is a wage if you can't live on it?

    The main problem is that people talk of jobs being a blessing rather than a necessity, they say things like:

    "At least you have a job! Be thankful for it!"

    But everyone should be able to have a job and survive, it shouldn't ever be necessary for someone to work a 50 hour week just to keep their family afloat.

  • rate this
    +7

    Comment number 565.

    7 years I have taken the hit of bill, rent ,council tax and food rises with out a pay rise in that time

  • rate this
    +3

    Comment number 564.

    UK economy - consumer based

    Growth stimulus - pay structures that maximise consumer spending

    Less for the top / more for the bottom.

    Low pay for the majority - recession or at best, slow growth

  • rate this
    +35

    Comment number 563.

    Time for a revolution. Who is with me?

 

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