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
    -7

    Comment number 662.

    This fall in earnings is in fact an injection of realism into the wider economy. In the 'boom' years we were paying ourselves more than the economy could stand and living above our means fuelled by cheap credit. Germany by contrast has always invested in its economy and has never spent above its means, which is why its economy is so successful. For Britain, this squeeze is the Blair/Brown legacy.

  • rate this
    +10

    Comment number 661.

    I felt upset to learn about the outrageous salaries of CEO in charities. The problem of GB is that "management charges are too high". Money is supposed to go to our know-how technologists and front-line workers, but always hijacked by managers in every organization and company.

  • rate this
    +4

    Comment number 660.

    626.D

    "And what are you doing about it? Do what it takes to get on in life and stop expecting other people to pay towards your benefits. Get educated and get a better job. Stop moaning."

    The OP stated clearly that he got no benefits.

    And there are many well educated qualified people on the sort of pay he quotes - often on zero hour contracts.

  • rate this
    -1

    Comment number 659.

    A fascist government perhaps?

  • rate this
    +2

    Comment number 658.

    Huh! The usual leftie trolls out in force again.

    High time Mr & Mrs UK realised we lived for years beyond our means under the Great Gloom, borrowed what we couldn't be bothered to earn or save, spent like lunatics, thought the world owed us a living. Well it didn't, and 10 years of delusion & profligacy will take years to put right. Austerity has hardly begun and more is needed. Get used to it!

  • rate this
    +8

    Comment number 657.

    "In 2009 the average public sector worker earned £16.60 per hour"

    In that case, I'm not suprised salaries have dropped!!
    That's too high a salary in the current climate...and I work in the public sector.

  • rate this
    -6

    Comment number 656.

    What do you expect with the tories?

  • rate this
    +2

    Comment number 655.

    I was going to offer my opinion on HYS page, item Mali....its there but not open for discussion. It just gets sillier by the day!!

  • rate this
    0

    Comment number 654.

    Those who run this country, our politicians, are funded by big business and protected wealth, I would go as far as to say manipulated by bug business and protected wealth. Nothing will change as long as it is not in their interests to do so.

  • rate this
    -6

    Comment number 653.

    #635 EU immigrants are poor workers...if they were any good they stay in their own countries......come the EU vote we can dispatch these scroungers once and for all.

  • rate this
    +2

    Comment number 652.

    Emigrate?

  • rate this
    +2

    Comment number 651.

    472[France] Finance Minister Moscovici on Saturday said France's economy may shrink 0.1% this year, after predicting 0.1% growth earlier this year.But he predicts a rebound of 0.3% growth in 2014.The IMF predicts France's GDP will fall 0.2% this year.

    He got it wrong before, why would he be right this time?What difference does it make when debt grows more than 3% over GDP?The walking dead.

  • rate this
    +5

    Comment number 650.

    It is really silly arguing about the merits of right/left politics when neither party really believes in anything but self interest. Its no way to manage a nation state.

    If people really believe this is a democracy put it to the test try putting choosing your own local candidate with no party affiliations. What have you to be afraid of?

    It's hard to see how they would be much worse.

  • rate this
    +5

    Comment number 649.

    Proves just how grievous the damage done to UK plc in 2008 - 2009 was.
    The structural damage done to our economy will take decades to undo

  • rate this
    +11

    Comment number 648.

    Perhaps we should all get a job with the BBC, fantastic pensions and payoffs all paid for by the taxpayer.

  • rate this
    0

    Comment number 647.

    Right of centrists are really defensive about this - they know their boys aren't working.

  • rate this
    +6

    Comment number 646.

    624.JayTime
    The 'Champaign Socialists' are out in force today.
    -----
    No shortage of neoconservative trolls either.

  • rate this
    0

    Comment number 645.

    364.
    Mike Thompson
    1 Hour ago

    Anyone who downgraded my comment (324) you must know "absolutely nothing about economics and / or be a very enthusiastic supporter of the Labour party. I wonder if there is a correlation between those two things? Just wondering, given the way Labour inherited a great economy and passed on a dreadful one. Again."

    Do you have the figures from 1997? Check it out!

  • rate this
    -4

    Comment number 644.

    When are people going to realise that with so many people looking for work and there being so few jobs it is an employers market. Things would be different if the boot was on the other foot. We'd have no end of strikes to get even more money. Just take a look at our balance of payments deficit then start to complain about low wages. No economic reality some people.

  • rate this
    0

    Comment number 643.

    The hundreds of thousands of immigrants that have come into this country over the last 10 years have driven down wages at the lower end of the market.
    Labour,for their all embracing internationalist views were only too happy for that to happen,and the tories are delighted because there's loads of foreign labour that'll work for less.
    Of course,that doesn't happen at the top end of the wage scale.

 

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