Workers are more than £1,000 worse off than they were in the depths of the financial crisis, and living standards will tumble over the next generation, economists have warned. Average take-home pay after inflation is now £20,844 – down from £22,056 at the end of 2008. Average take-home pay is £1,212 lower than it was at the end of 2008, once inflation has been taken into account.
‘Real’ incomes – wages after inflation – are around 5 per cent below where they were five years ago, according to the Centre for Economics and Business Research.
According to research commissioned by the BBC's Newsnight, in real terms:
- the average construction worker is taking home £86 a month less
- the average retail worker is £25 a month worse off
- and the average public sector worker is down £58 a month.
Douglas McWilliams, the think-tank’s chief executive, said: ‘If you extrapolate this, it comes to a fall in living standards for the average household of about a quarter over a generation.’
A report by the Chartered Institute of Personnel and Development this week showed that only a quarter of workers in the UK have had a pay rise so far this year.
Pat Harrington, of the Nationalist Trade Union Solidarity, said:
‘Millions of workers are being hit by a combination of rising taxes, soaring inflation and pay freezes or nominal increases. Prices of essentials and utility bills are soaring. It is hitting workers’ living standards hard.’
Sir Mervyn King, Governor of the Bank of England, has warned families are being crippled by the biggest squeeze in their finances since the 1920s.
Mr McWilliams added: ‘If the squeeze in living standards continues as I am predicting, it is likely to create political problems.’