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
    +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
    -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
    +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
    -98

    Comment number 454.

    People complaining about a drop in wage should just be happy they live in an area with jobs which actually pay more than minimum wage in the first place.

  • rate this
    +120

    Comment number 438.

    Poor wages & low pay rises were there even before the recession began so this is nothing new. The bloodsucking Company I work for has been taken to ACAS 4 times in the last 6 years, they want more & more out of people for less and less pay. I can't afford to have a family, a holiday, or even go out anymore- I just exist for work with no r&r. I'm sick of it.

 

Comments 5 of 11

 

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