Fall in real wages longest for half a century, official figures show

The Office for National Statistics (ONS) said low productivity growth seems to be pushing wages down.

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

The study followed a report by the Institute for Fiscal Studies which said that while the fall in household incomes has now probably come to a halt, living standards are still “dramatically” down on what they were before the global financial crisis hit in 2008.

The Government said last week that most British workers have seen their take-home pay rise in real terms in the past year.

Real wage growth averaged 2.9 per cent in the 1970s and 1980s, 1.5 per cent in the 1990s, 1.2 per cent in 2000s, but has fallen to minus 2.2 per cent since the first quarter of 2010, the ONS figures showed.

TUC general secretary Frances O’Grady said: “Over the last four years British workers have suffered an unprecedented real wage squeeze.

“Worryingly, average pay rises have been getter 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.”

Asked whether the Prime Minister was concerned about the evidence of falling real-terms wages, David Cameron’s official spokesman told a Westminster media briefing: “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.”

Shadow Chief Secretary to the Treasury Chris Leslie said: “The Tories are so out of touch they deny there’s a cost-of-living crisis, but these figures show the biggest fall in real wages since records began 50 years ago.

“Wages after inflation have fallen by 2.2 per cent a year since 2010. But while working people are worse off under David Cameron, he has chosen this time to give the richest one per cent of earners a huge tax cut.”

Unite union general secretary Len McCluskey said: “These figures expose the Government’s shocking complacency. The bald truth is that the cost of living in this country is vastly outstripping wages.”