UK real wages plummet by more than 10% in just eight years

Real-terms wages in the UK fell by more than 10% between 2007 and 2015, the biggest fall among leading OECD countries.


Real-terms wages in the UK fell by more than 10% between 2007 and 2015, the biggest fall among leading OECD countries, according to new analysis by the Trade Union Congress (TUC).

TUC analysis of OECD data reveals that real wages in the UK fell by 10.4% over the eight year period, equaled only by Greece who have also experienced a 9% drop in the number of people in work compared to a 0.6% increase in the UK.

Meanwhile, countries such as Germany and Hungary have seen employment rise and wages grow at the same time.

The UK, Greece and Portugal were the only three OECD countries to see real wages fall between 2007 and 2015.

Real wages grew in Poland by 23%, in Germany by 14%, and in France by 11%. Across the OECD, real wages increased by an average of 6.7%.

Frances O’Grady, TUC general secretary, said: “Wages fell off the cliff after the financial crisis, and have barely begun to recover.

“As the Bank of England recently argued, the majority of UK households have endured a ‘lost decade of income’.


“People cannot afford another hit to their pay packets. Working people must not foot the bill for a Brexit downturn in the way they did for the bankers’ crash.

“This analysis shows why the government needs to invest in large infrastructure projects to create more decent, well-paid jobs. Other countries have shown that it is possible to increase employment and living standards at the same time.”

Rob Joyce, an IFS researcher, told The Guardian: “It is not just unusual in international terms but also unusual historically for the UK.

“Real wages have fallen and haven’t recovered. That’s striking.”

A Treasury spokesperson said the “UK employment rate has grown more than any G7 country”, adding: “Living standards have reached their highest level and wages continue to rise faster than prices – and will be helped by the new national living wage”.

However, they conceded: “There is more to do to build an economy and country that works for everyone not just a privileged few, and we are determined to do exactly that.”

A recent study found that two-thirds of children living in poverty now come from a household where at least one adult is in work. Only a third of children below the poverty line live in households where nobody works.

IFS director Robert Joyce, a co-author of the study, said: “Tackling low income is increasingly about tackling the problems faced by low-earning working households.

“In the short term this would be aided by a continued recovery in the number of hours worked by those on low wages or by more second earners entering work.

“Ultimately substantial progress will depend crucially on economic policies that push up productivity. Economic uncertainty following the Brexit vote will only serve to make these challenges all the tougher.”

The number of children in poverty has increased by 20,000 in only a year. DWP figures show there were 3.9 million children living in “relative poverty” in 2014-15, up from 3.7 million the previous year.


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