Drop in real wages longest for 50 years, says ONS

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The cost of living has been debated regularly by politicians recently

Real wages have been dropping consistently since 2010 - the longest period of falls since at least 1964, official figures show.

Real wages calculate earnings when the rising cost of living, or inflation, is taken into account.

The Office for National Statistics said real wages had fallen by 2.2% annually since the first three months of 2010.

Shorter working hours and reduced output were factors behind falling wages, it added.

'No break'

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IFS Director Paul Johnson: "A 2% fall is more painful for someone near the bottom"

There has been a considerable amount of political debate regarding the level of wages that people are paid, and the cost of living.

On Thursday, the Institute for Fiscal Studies produced a report that suggested that a mid-range household's income between 2013 and 2014 was 6% below its pre-crisis peak.

It also said that although falling incomes had come to an end, the average household would not see its income recover before the next election.

Now, the ONS has published its own report, specifically on wages, that draws on all the data it has available.

It concluded that the drop in wages from 2010, following the financial crisis, was the longest period of falls since 1964.

During the financial crisis, many employers asked staff to work shorter hours or on reduced output, rather than making them redundant.

The ONS said that the response to the fall in productivity in 2008 and 2009 was the main reason behind the fall in real wages.

Different inflation rates between what is produced and what is consumed were also highlighted.

It also said that wages were still falling in the third quarter of 2013 - the latest figures available for all measures - with a drop of 1.5% compared with the same period a year earlier.

"[This makes] it difficult to conclude that there has yet been a break from the trend of falling real wage growth," it said.

'Wage squeeze'

The figures showed that wage growth was highest in the 1970s and 1980s, when it went up by an average of 2.9% a year.

This annual wage growth slowed to 1.5% in the 1990s, then to 1.2% in the 2000s, before the most recent falls.

"Over the last four years British workers have suffered an unprecedented real wage squeeze," said TUC General Secretary Frances O'Grady.

"Even more worryingly, average pay rises have got weaker in every decade since the 1980s, despite increases in productivity, growth and profits. Unless things change, the 2010s could be the first ever decade of falling wages.

"A return to business as usual may only bring modest pay growth. We need radical economic reform to give hard-working people the pay rises they deserve."

Prime Minister David Cameron's official spokesman said: "Should we deplore the fact that Britain has been made poorer as a result of the great recession of 2008-09 and as a result of the financial crisis?

"The Prime Minister has been very clear about the mistakes that were made at the time and the long-term economic plan which the government has had to put in place to address it."

Chris Leslie, Labour's shadow chief secretary to the Treasury, said: "The Tories are so out of touch they deny there is a cost-of-living crisis. But these figures show the biggest fall in real wages since records began 50 years ago.

"Labour will act to ensure we earn our way to higher living standards for all."

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