THE RESOLUTION FOUNDATION says that Britain’s pay problems and the stagnation in living standards go much further back than the soaring inflation which has caused a massive fall in workers’ real wages over the last year.
If wages had continued to grow as they were before the financial crash of 2008, real average weekly earnings would be around £11,000 per year higher than they currently are – a 37 per cent lost wages gap.
The gap between typical UK household incomes and those of comparator countries has also widened. In the period running up to the financial crisis, German households were better off than British households by £500 per year, but that has since increased to £4,000. The toxic combination of low growth and high inequality mean that poorer households in Britain are most exposed to this stagnation – while typical households in the UK are nine per cent poorer than their equivalents in France, low-income households are now 22 per cent poorer.
Torsten Bell, Chief Executive of the Resolution Foundation, said: “The wage stagnation of the past decade and a half is almost completely unprecedented. Nobody who’s alive and working in the British economy today has ever seen anything like this, and the toxic combination of low growth and high inequality has left poorer households particularly exposed.
“This is definitely not what normal looks like. This is what failure looks like, and we urgently need an economic strategy to turn this state of affairs around.”
* Source: Resolution Foundation