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UK ranks joint worst for 'real' wages since crisis
Pay rates fall more than ten per cent in eight years, says TUC, putting workers on a par with Greece
UK workers have endured the joint-worst hit to real incomes since the financial crisis compared to all other advanced nations, a drop in pay that's matched only by thrice-bailed out Greece.
According to analysis published today by trade-union umbrella group the TUC, UK pay rates fell by 10.4 per cent between 2007 and 2015 after the effects of inflation were taken into account. That's the same rate of decline as Greece.
Portugal is the only other developed country within the Organisation for Economic Co-operation and Development (OECD) with falling real wages over the same period, recording a drop of 3.7 per cent.
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In contrast, real pay in Poland has surged by 23 per cent and in Germany and France by nearly 14 per cent and 10.5 per cent. On average across the OECD, on whose data the Trades Union Congress based its figures, underlying wages have risen by 6.7 per cent.
"Real" wages rise when the rate of growth exceeds inflation, which relates to the price of goods people are spending their earnings on. When real pay growth is negative, it means workers feel on average proportionately poorer.
After the crash, UK inflation exceeded pay growth for six consecutive years until 2014, according to the BBC. Real pay has been on the rise ever since, but only marginally and as a result of inflation falling to near zero.
Median wages and disposable income in cash terms actually surpassed their pre-crash peak last year, official figures show.
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A government spokesman told The Guardian that the TUC's findings should be treated with caution as they fail to take into account changes to taxation that have targeted lower-paid workers, adding that living standards have been rising in the UK and that employment is currently at a record high.
The strong labour market highlights what economists refer to as the UK's "productivity puzzle" - more people are in work but they are proving less productive, bringing downward pressure on wages.
In France and the US, real wages have increased since 2007 despite a similar drop in productivity, the Financial Times notes, but this has come at the cost of higher unemployment. Germany is alone among larger nations in recording rising wages and employment.
The TUC says the government should invest in big infrastructure projects to bring higher-paying jobs to the UK and boost the country's productive capacity.
While public investment certainly wouldn't hurt", on its own, it "wouldn’t solve the productivity crisis", says Duncan Weldon in the Guardian. He suggests the government introduce policies designed to encourage more long-term corporate decision-making and to boost pay directly, such as the national living wage.
