The UK has had the biggest fall in real wages (inflation-adjusted) of any other advanced country apart from Greece, since the financial crisis began in 2007, recent research shows. Germany had the biggest rise of the advanced countries.


A report by the UK’s Trades Union Congress, shows that real earnings have dipped more than 10% in the period 2007-2015, leaving the UK equal bottom of the wage growth league table with Greece, while the UK, Greece and Portugal were the only three OECD countries that saw real wages fall over the seven-year period.

By contrast, over the same eight-year period, real wages grew in Poland by 23%, in Germany by 14%, and in France by 11%. Across the OECD, real wages increased by an average of 6.7%. Ireland had a rise of 1.6%.

The TUC calculated the changes in employment and real wages using OECD data released in their 2016 Employment Outlook. The OECD derive real wages from national accounts, dividing total wages by hours worked and putting into real terms with the household consumption deflator.

The UK saw a 0.6% rise in the employment rate while Poland and Germany saw big increases in the rates, whereas France recorded a 1.8% fall.

The United States saw real wages grow by 6.4% while the employment rate fell by 3.4%.

The US Bureau of Labor Statistics reported last month that from June 2015 to June 2016, real average hourly earnings increased 1.7%, seasonally adjusted. The increase in real average hourly earnings combined with no change in the average workweek resulted in a 1.7% rise in real average weekly earnings over this period.

The Institute for Fiscal Studies, which analyses UK living standards, said the prolonged period of depressed earnings had been one of the features that made both the recession of 2008-09 and the period since, unusual.

Rob Joyce, an IFS researcher, said: “It is not just unusual in international terms but also unusual historically for the UK. Real wages have fallen and haven’t recovered. That’s striking.”

Real wages, financial crisis, UK, Greece,

The IFS said in a July report on incomes, poverty and inequality in the UK:

Recent years have seen a truly remarkable transformation in patterns of low income in the UK. One great success is that pensioner incomes have grown so much and, after housing costs, they are now the least likely major demographic group to be in income poverty. Another is that more people are in work than ever before. The proportion of children living in a household where no-one works has fallen from nearly one in four in 1994–95 to less than one in six in 2014–15. The “new poor” tend to live in households where there is someone in work. Only a third of children below the government’s absolute poverty line now live in a workless household two thirds of those classified as poor are poor despite the fact that at least one of their parents is in work. So if the new prime minister takes forward the ‘life chances’ strategy started by her predecessor, that strategy needs to focus on lifting the incomes of working households.

UK executive pay

Senior executives of Britain's biggest companies now take home an average of £5.5m per year, a report published on Monday said.

The High Pay Centre says chief executives of firms on London's FTSE 100 index saw their mean average income rise by 10% in 2015. Median pay rose to just under £4m, 144 times the median wage of the average worker, which is currently £27,600.

The report followed last month's comments from the new prime minister who proposed a crackdown on excessive boardroom salaries.

Theresa May said shareholder votes on executive pay should be binding. In July, she said there was an "irrational, unhealthy and growing gap" between what top companies pay their workers and what they pay their bosses.

UK national living wage

The Guardian reported Monday that Downing Street has dismissed pressure to slow the implementation of the ”national living wage” in the face of lobbying from businesses concerned about rising salary bills.

The policy, which is expected to raise the minimum wage for the over-25s to approximately £9 an hour by 2020, was the centrepiece of George Osborne’s 2015 budget.

The newspaper says it emerged on Monday that at least 16 trade bodies have written to the business secretary, Greg Clark, urging him to reconsider the plans in light of the economic slowdown expected after the UK’s vote to leave the European Union.

However, Theresa May’s official spokeswoman pointed to her pledge, immediately after she became prime minister last month, to govern in the interests of families struggling to make ends meet.

The national living wage policy accounts at least partly for an economic downturn as it is set in relation to median wages (mid-point where half the workforce are above and half below), and is targeting 60% of median UK pay by 2020. The minimum wage for over-25s rose by 50p an hour in April to £7.20 as a result.

Note: The charts  were produced by the World Economic Forum.

Wage earnings rise, Germany, UK