UK workers £300 worse off thanks to rising inflation and stagnant wages
Real-terms wages for workers in both the private and public sector have fallen by around £300 over the last twelve months, research shows.
Analysis of data from the Office for National Statistics (ONS) by the Social Market Foundation (SMF) reveals that workers in the UK in both the private and public sector are, on average, £300 worse off in 2017 than just twelve months ago.
The drop in real-terms earnings is directly attributed to rising inflation and weak wage growth, and is in addition to any income loses caused by draconian cuts to in-work benefits.
The SMF say average gross earnings (total pay) for July 2017 were £505 per week, but when combined with the latest inflation figures, and accounting for the economy as a whole, UK workers are £309 worse off than a year ago.
Private sector workers took home £503 per week on average in July 2017, which SMF says represents a £305 fall in annual income over twelve months.
Meanwhile, public sector worker’s average gross pay was £512 per week. But taking inflation into account, as well as the Tory-enforced pay cap, they earned £258 less than they did a year ago.
SMF chief economist Scott Corfe said: “After adjusting for inflation, workers are significantly worse off than they were a year ago. In part this reflects the increase in the cost of living as a weak currency has pushed up the price of imported goods.
“But it also reflects weak earnings growth which remains stubbornly stuck in the doldrums. Improving productivity to boost pay is absolutely critical.”
“With total pay growth lower in the private sector than the public sector in July, the government will be under more pressure to boost the pay of all workers in the economy. Lifting the public sector pay cap benefits less than a fifth of the workforce.”
The news comes as ONS data shows that 181,000 more people were in work in February to April 2017, up by 379,000 on the same period in the previous year.
According to the data, there are also 75,000 fewer unemployed people when compared to a year ago, with the official unemployment rate now at 4.3% – the lowest rate since 1975.
However, the data also shows that average weekly earnings have fallen in real terms by 0.4%, both including and excluding bonuses.
Commenting on the ONS findings, Labour’s Shadow Work and Pensions Secretary Debbie Abrahams said: “Over 7 million people from working families are living in poverty, more than ever before.
“We welcome the overall increase in employment, but are deeply concerned that millions are still unable to make ends meet as the cost of basic essentials spirals while real pay falls.
“Too many still find it more difficult to get a job because of their age, ethnicity, disability or where they live. And these same groups bear the brunt of this Government’s failed austerity plans.”
She added: “A Labour government will implement a real Living Wage of £10 per hour, and put an end to Tory austerity.”