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.


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

    Comment number 682.

    Wages down, Prices up! good to know you can rely on the Tories to
    a) look after their mates
    b) run roughshod over everyone else
    c) waste vast amounts of OUR money, fighting silly wars & supporting corrupt foreign regimes
    mind you, the other lot are no better! their record when in office is terrible! & they are supposed to be the worker's party! what a laugh that is!

  • rate this

    Comment number 681.

    The reality of the cost of commodities is the same throughout the world and we complain about earning to little the average wage in Croatia is about 500 pounds a month and cost of food, electric etc is the same and tax is 25%, we are very lucky to have such a high standard of living in the UK!

  • rate this

    Comment number 680.

    Public sector workers get an average of £15.80 ph? Misleading nonsense. All that that tells us is there is a small group of technocrats who earn huge wages, bumping the average up. The median wage would be much lower, more like £10 ph (which is less than £20k).

  • rate this

    Comment number 679.

    4 Minutes ago

    Where to exactly? im not trying to deny this is bad news but very few places in Europe (Bar Germany) are doing better than us,in fact many of them are doing worse. Despite the drops in wages they are higher here than they are in Italy.

  • rate this

    Comment number 678.

    for two generations we've lived beyond our means

    our response to a (deserved) banking collapse has been to borrow even more

    demand for labour is not strong - therefore wages fall

    utility costs and tax revenue must rise, import prices may rise to reflect far eastern cost rises

    real disposable income falls

    the overdue squeeze is now on

    but we've been saving or a rainy day

    haven't we?

  • rate this

    Comment number 677.

    State vs private sector balance @275 makes a very good point
    Why are we so different?
    Perhaps someone could help with some information:
    1. Do Germans pay higher taxes than us?
    2. How can Germany afford to pay workers more than us?
    3. Is Germany a more egalitarian society?
    4. A very interesting statistic would be the ratio between the average top and bottom 10% salaries - a measure of rich vs poor

  • rate this

    Comment number 676.

    What this rather out of date and biased report misses is that this Govt has lowered taxes on the poorest workers and raised on the higher earners to a far higher degree than when Labour were in power, FACT. Although wages have fallen, low pay workers are paying far less tax, if any, so take home pay is up! The fact is that the Coalition is helping workers whereas Labour help their work shy voters

  • rate this

    Comment number 675.

    The working mens' wages drop substantially

    MPs demand and get (probably – We’ll never know) a salary increase of 20-30%

    We’re all in this together?

    Yeah right!

  • rate this

    Comment number 674.

    In the UK the governments focus is always on corporate profits rather than employee living standards.

    When they talk about 'economic recovery' they mean a better return for share holders rather than an end to the daily struggle that many people on low wages are experiencing.

  • rate this

    Comment number 673.

    We have biggest drop in wages but not the worst wages.

  • rate this

    Comment number 672.

    A start would be legislation that states: -

    1. No business may pay an executive bonus or a dividend unless all employees earn sufficient not to need working tax credits.
    2. All employees get the same % pay rise if anyone in the company gets one.

    But find a politician who puts people first enough to propose that? Oink Flap!

  • rate this

    Comment number 671.

    All money saved by reducing the pay of the low earner goes into the pockets of the high earner for doing a good job.

  • rate this

    Comment number 670.

    658. HarryPHall
    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,.......................

    Problem is Harry, not everyone is being austere, now are they?

  • rate this

    Comment number 669.

    I was offered temp work recently - Office Administrator - £7.00 per hour. Disgusted I turned it down. I saw recently on a TV news item that people are being paid £10-£11 per hour to pick fruit. I may as well go and do that and it would be less stressful picking fruit, rather than answering endless emails.

  • rate this

    Comment number 668.

    Seems pretty much everything has gone up over the 5 years since I last got a raise. Employers are using the current state of the economy to pay substandard wages. My employer is taking on new people but at salaries last paid in the 90's, next step will to get shot of those of us on salaries higher than they need to pay now. Then we'll be the ones taking lo paid jobs elsewhere as it spirals down.

  • rate this

    Comment number 667.

    I have advertised a job for £16k, flexible hours, full training.

    I phone first CV aplicant's phone and ask to come for interview. Reply "Can we make it another day, I'm signing on tomorrow?"

    Another reply, "Can we make it another day, it's me nan's birthday and not sure what state I'll be in?"

    I'm not joking, these were true answers. Anyone who tells me there are no jobs out there, WAKE UP!

  • rate this

    Comment number 666.

    "UK wages decline among worst in Europe". Well, Well, Well. This when bankers bonuses are back to pre 2008 levels, there are more people earning of £1 million than in 2010, MP's expecting a 10% pay rise, the queen gets big "pay" rise. All this while ordinary person is suffering & struggling. Welcome to Victorian Britain.

  • rate this

    Comment number 665.

    All those that condemn Trade Unions,should be having second thoughts about now?
    Our forefathers fought for our Rights,looks like we will have to fight the same battles.
    Shame on us for letting this happen.

  • rate this

    Comment number 664.

    624. JayTime

    The 'Champaign Socialists' are out in force today
    What a quaint expression. Of course you're out of date - by about 4 decades. You know the period, when the tories weren't extreme and the UK political landscape didn't mirror the US democrat/republican Corporate controlled system like it does now.

    Still playing your Gary Glitter albums?

  • rate this

    Comment number 663.

    Forget the 'squeezed middle' and let's adjust our language to recognise the overworking classes and their contribution to keeping this economy going in spite of dire mismanagement from above. Years of downward pressure on wages is now exacerbated by yet another property bubble in London and its effects spreading outwards. That the 'masters of the universe' think this a 'good thing' speaks volumes.


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