Shrinking pay loses £5.7 billion from South West England economy

By agency reporter
June 11, 2013

The value of South West England's overall pay packet has fallen by 10 per cent since 2007, according to a TUC analysis published today (Tuesday 11th June) to launch its new pay campaign: 'Britain Needs A Pay Rise'.

The Trades Union Congress (TUC) analysis of official figures shows that on the eve of the recession in 2007, workers across the South West were earning a total of £57 billion (in 2012 prices).

However despite rises in employment, a combination of falling real wages, reduced hours and changes in the kind of jobs people are doing has reduced the region's total pay packet to £51 billion over the last five years - a real terms annual cut of £5.7 billion in 2012.

The analysis shows that the modest rise in the number of people in work since 2007 has failed to offset the sharp real-terms cuts to people's wages.

While individuals and their families are feeling the pain of a tight squeeze in their living standards, businesses are also affected by cuts in total pay in their local areas. If both the amount of money people have and the number of people spending are falling, businesses will struggle. Britain's shrinking pay packet is bad for workers and bad for businesses, says the TUC.

The TUC believes there are three main reasons for the sharp fall in the nation's total pay packet; wages failing to keep pace with inflation, a shift towards reduced working hours, including part-time work, and the replacement of middle and relatively well-paid jobs, particularly in the public sector, with lower paid jobs in the private sector.

The analysis shows that Britain desperately needs a pay rise, says the TUC. That's why over the coming months the TUC will be campaigning for decent and fair wages across the private and public sectors.

But raising Britain's pay packet will only help the economy if wage gains are spread evenly across the country and if ordinary people rather than chief executives see their wages rise, says the TUC.

In the run up to the crash, only the top five per cent of earners experienced real wage growth above one per cent. That's why the TUC will campaign against pay inequality calling for greater pay transparency and a role for ordinary workers in the setting of boardroom pay.

South TUC Regional Secretary Nigel Costley said: "Over the last five years, people in the West Country 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 the regional pay packet by more than £5.7 billion. It's no wonder businesses are struggling when so much demand has been sucked out of the economy.

"Shrinking wages are hitting people's living standards, holding back businesses and damaging our growth prospects. The South West desperately needs a pay rise. 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," he declared.

* More details of the TUC campaign can be found here:


Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.