UK workers are suffering the longest and most severe decline in real earnings since records began in Victorian times, according to a new analysis published today (Sunday) by the TUC.
This year, workers across the UK face the seventh consecutive year of falling real earnings – a situation that has no historical precedent, says the TUC. Even the pay squeeze of the long depression of the 1920s was shorter. The total decline in earnings since 2007 is over eight per cent, according to the TUC analysis.
The TUC study compares the current situation with four major earnings crises in UK history – 1865-67, 1874-78, 1921-23, 1976-77.
The real wages drops during each of these crises lasted only two years, apart from 1874-78 when there were four consecutive years of falling real earnings. After the initial drops, earnings growth resumed, but now the UK is in the seventh year of financial earnings pain and there has yet to be any let up, says the TUC.
Seven years after the start of the slumps of the 1860s and 1970s, earnings were above their pre-crisis peak. Although after the downturns of the 1870s and 1920s earnings still had not got back to where they had been before the economy went into freefall, the TUC analysis shows that the current pay squeeze is twice as deep as the worst of these episodes (eight per cent compared to four per cent in the 1920s.)
TUC General Secretary Frances O’Grady said:
“It’s shocking that even the most infamous periods of pay depression in the last 150 years pale into comparison when looking at the current seven-year collapse in earnings.
“The government says the economy is growing again, but there’s no evidence of any recovery in ordinary workers’ pay packets. Across the country people are struggling to make ends meet, as their pay lags behind prices and there seems to be no end in sight to their financial misery.
“Vast swathes of Britain are long overdue a pay rise. That’s why we expect to see tens of thousands join our march next weekend, calling on politicians and employers to help them share in the recovery and start spending again without fear of falling into debt.”
The historical figures are based on annual earnings and inflation figures recorded by the Bank of England.