British workers are taking home less in real terms than when Tony Blair won his second general election victory in 2001, with men and young people hit hardest by the wage squeeze that followed the financial crisis, according to new research. The Institute for Fiscal Studies thinktank said wages were 1% lower in the third quarter of 2014 than in the same period 13 years earlier after taking inflation into account.
Men’s pay fell by 7.3% in real terms between 2008 and 2014 while women’s average hourly pay, relatively cushioned from the worst of the wage cuts because they are more likely to be in public sector jobs, fell by 2.5% , the IFS found which also indicated that the relative advantage gained from working in the public sector would be reversed in the years ahead because both major parties were promising to press on with public sector pay restraint.
Younger workers were among the biggest victims of the falling living standards that have become widespread in post-crash Britain. During the 2009-11 period, when wage declines were most pronounced, the earnings of 22- to 29-year-olds fell by 10.6%, compared with just under 7% for older age groups. By 2014 it remained 9% lower than in 2008.
Jonathan Cribb, an author of the report, said: “Almost all groups have seen real wages fall since the recession.”
Frances O’Grady, the general secretary of the Trade Union Congress said the government must do more than rely on a “lucky” run of low inflation numbers to boost salaries.