Pay shrinks by more than 10% in some regions -TUC

Tue, 11/06/2013 - 10:36 -- nick

Pay in some regions of the UK has shrunk by more than 10% in real terms since the beginning of the economic downturn in 2007.

Analysis by the TUC has found that, when inflation is taken into account, the North West of England saw average wage drops of 10.6%, while the South West, West Midlands and Scottish economies have all seen falls of around 10%.

Every region of the UK saw wages falling in real terms, meaning unemployed people have struggled to be able to afford to get into jobs.

The TUC puts the cost of this at £52 billion, money which has been taken out of local economies even while many companies have been increasing profits.

Adding to the problem has been that the number of hours worked on average has fallen since 2007, while slightly higher paid public sector work has been replaced by lower paid private sector work as the size of the state has been shrunk through government cuts.

Businesses which pay lower wages are being faced with a decreasing amount of money available to buy their goods and services, a downward spiral that risks holding back any potential recovery.

Before the crash only the top 5% of earners saw any real wage growth, and the TUC is campaigning for the lower paid to help ensure the benefits of profitable companies are spread more widely.

TUC General Secretary Frances O'Grady said: 'Over the last five years, people have taken a massive hit in their pay packets, while millions more have had to reduce their hours or take lower paid work. Many people have lost their jobs altogether.

'Taken together, our pay and jobs crises have shrunk Britain's total annual pay packet by more than £50bn. It's no wonder businesses are struggling when so much demand has been sucked out of the economy.

'Britain's shrinking wages are hitting people's living standards, holding back businesses and damaging our growth prospects. Britain desperately needs a pay rise.

'While economic growth is the key challenge facing the UK today, the years running up to the crash taught us that growth without wage gains just creates more unsustainable debt. Employers and both local and central governments need to recognise the importance of decent wages in delivering sustainable economic growth. They can start by becoming living wage employers and being more transparent about their pay systems.'

Unemployment has not been as high as some economists have predicted since the beginning of the economic downturn, and decreasing wages are one way of keeping people in work.

However, the government's policy of decreasing benefits and tax credits means lower income people are struggling to make ends meet whether in work or out of work.

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