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
    +3

    Comment number 702.

    Talk of "recovery" rings rather hollow in places like the Black Country. The booms and busts of the last 40 years have not touched areas like the Black Country. In those areas, poverty has been the steady state for 50 years, 100 years, even more. Poor housing, unemployment, lack of educational ambition, these things have gone on for so long now that noone believes it will ever change.

  • rate this
    -4

    Comment number 701.

    Hardly surprising, really. What did they expect? My family has had a pay freeze for the last five years, yet everything else is going up. Get rid of the freeloaders and help those who are trying to make this country's economy work. And while you're at it Cameron et al, you might like to cut taxes and get shot of that toothless Ofgem and Ofwat

  • rate this
    +3

    Comment number 700.

    This is not a recession. This is a robbery, and those who work for a living are its victims and the rich are its perpetrators.

  • rate this
    +7

    Comment number 699.

    @566. Joe

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

    --

    Every wage is a living wage. Its level simply determines what type of life you have.

  • rate this
    +6

    Comment number 698.

    Is that not a problem in its self the people who REALLY do pay TAX are now earning less so meaning they who do not PAY TAX may have to chip in I must I must call the TAX Office to find out why on £20000 a year I pay tax however my neighbour who told me is £100,000 has an accountant that gets him out of that and is even entitled to free school meal for the kids ( in his defence he said he pays)

  • rate this
    +1

    Comment number 697.

    People take a look at the minimum wages for other EU countries that have it in place and you will be surprized.
    For example Belgium is about 11 euro an hour.
    Makes you wonder

  • rate this
    -6

    Comment number 696.

    Its better to have had it and lost it, than never to have had it at all.

  • rate this
    +160

    Comment number 695.

    Why not link MPs pay rise to the national average rise - if the country (us) doesn't do well, neither do the MPs. maybe this would be more of an incentive to come up with policies that work for everyone.

    ...and at times when austerity is required, at least we then would all be in it together as they would see their wages fall as well.

  • rate this
    -5

    Comment number 694.

    #665: "All those that condemn Trade Unions,should be having second thoughts"

    Why? The bully-boy tactics of the unions, going back to the 1960s, are one of the main reasons for the lack of competitiveness of UK industry. Take a look at the US, where states that have right-to-work laws have growing economies and those dominated by unionized labour are in terminal decline.

  • rate this
    -28

    Comment number 693.

    I believe bankers and CEOs getting bonuses and high pay is just the way the world works. They have a lot of responsibility to shoulder. I don't see what all the moaning is about anyway, they are businesses (like any other) that generate income, so why not pay out bonuses, dividends, etc, as the general consensus of ***shareholders*** sees fit?

    Petty squeals from the angry mob.

  • rate this
    +3

    Comment number 692.

    "ronnieboy1
    come the EU vote we can dispatch these scroungers once and for all."

    And get back the 2 million or so ex-pat Brits living, working and retired in other EU countries. If you think these will be stacking shelves in Tesco, picking food in fields and won't be pushing up house prices or imposing more burden on the NHS you're deluded. Oh, you'd overlooked that bit in your cunning plan!

  • Comment number 691.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +8

    Comment number 690.

    @616
    But being competitive DOESN'T mean lower wages - unless you want the UK to be a low-skill low-wage economy in a race to the bottom against, say, Jamaica.
    We need to be a high skill economy if we are to compete - that means a skilled respected and valued workforce, and that means higher wages. Treating workers as simply a drain on a company, rather than assets, has reduced our competitiveness

  • rate this
    +2

    Comment number 689.

    People have probably forgotten that in the early 1990's, the UK was attractive to foreign investment precisely because of its low wages.

    Things have not changed much!

  • rate this
    0

    Comment number 688.

    I suppose nobody has heard of Latvia in Europe, Britain or EU. For you all to know - average pay in Latvia is about 700 pounds A MONTH, minimal wage - about 2 pounds an hour. Poor British people, hope they don't starve!

    P.S. Latvia will become the 18th state of Eurozone on 1st January 2014

  • rate this
    +3

    Comment number 687.

    My employer when confronted about the fifth below inflation pay increase in five years takes the attitude of 'you should be grateful for any increase' despite the fact we are, year-on-year getting less for doing more. But when you are on the salary he takes and is the only employee who gets a pension contribution paid it's an easy position to take...

  • rate this
    -2

    Comment number 686.

    The answer is make common cause with workers world-wide and abolish wages-system and prices in a Free Access Socialist society.No need for a capitalists,or their policing governments,as the capitalists produce nothing and only bring exploitation to the table.Workers produce all wealth and are rationed in their access to it by wages. Check http://www.worldsocialism.org/spgb/what-socialism

  • rate this
    +5

    Comment number 685.

    Funny how MPs are about to receive a RISE of £10,000 yet think others can manage on not much more as total income.

    Could it be that MPs (and a few others) think anyone excluded from their comfort zone automatically qualifies for benefits?

    Too many, in the eyes of the elite minority, are seen as scroungers when they're actually not!

  • rate this
    +3

    Comment number 684.

    And house prices continue to rise. We're doomed.

  • rate this
    -5

    Comment number 683.

    In the Tory Era (which will soon be over thankfully)
    Schoolgirls go from watching porn straight to hardcore
    Mentally it's meant to be funny but it's not
    (don't tell Tory HQ or GCHQ spying misinterpreting truth to spin white lies)

 

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