Workers ‘£1,000 worse off than two years ago’

The average employee has seen the value of their take-home pay dive by £1,088, or five per cent, in real terms since the middle of the recession, according to BBC One’s Panorama programme.

The study found that average annual salaries were £20,419 once tax had been deducted, but once the impact of inflation was factored in, the buying power of people’s pay was actually lower now than in 2004.

Workers in the construction sector have been hit particularly hard, with the value of their take-home pay falling by £1,188 a year in real terms since 2009, while financial intermediaries are £1,212 worse off.

The programme found that the squeeze in people’s living standards has been made worse by workers being too afraid of losing their job to ask for a pay rise.

David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, said: “One of the bleak things going on right now is that people are very fearful of losing their jobs.

“They’re worried about the austerity that’s coming, and that’s especially true of people in the public sector.

“So unemployment and the fear that it’ll rise further, is what’s containing wage pressure right now. And company profits have been also relatively low, so the ability of firms to pay has actually prevented wages from rising.”

The programme said the phenomena of workers being too afraid to ask for a pay rise was most obvious in the construction sector, which has shed 10 per cent of its workforce during the past year.

Research also found an estimated 659,000 households are already struggling with their mortgage payments, while around 117,000 people are in arrears.