British workers suffer squeeze on real wages

salary

The Office for National Statistics (ONS) has released a report, which examines real wages in the UK and shows that real earnings for British workers have continued to fall. 

Real wages are shown to decrease if fewer goods and services are bought because of inflation, even though nominal wages remain unchanged.

During the 2008-09 economic downturn there was a considerable fall in UK economic activity, which put downward pressure on nominal wage rises at a time when price inflation picked up, according to ONS figures. The data includes historical interaction between nominal wages, inflation and the resulting trends in real wages. ONS measures of real wages all show consistent falls in real wages since 2010. Other factors such as shorter working hours and reduced output also contributed to the drop in real earnings. The financial crisis resulted in many employers cutting staff hours or reducing output, rather than making their employees redundant.

The BBC stated that the Institute for Fiscal Studies has produced a report which suggests that the income for a mid-range household between 2013 and 2014 was 6% below its pre-crisis peak.

According to the Office for Budget Responsibility, real earnings are not expected to return to their 2009-10 levels until 2018-19, the Guardian stated. The news company also said that jobs website Adzuna has reported that salaries fell to a 16-month low in December, which was equal to a real-term drop in wages of GBP2,136. Salaries reportedly decreased in every region of the UK during the year to December, apart from Wales, where salaries have risen 4.1% over the 12 months to December.

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