Profits rise - Wages fall

British workers are suffering the longest and severest decline in real earnings since the mid-Victorian era, according to new analysis by the TUC.  The UK would have to go back to the 1860s for a pay squeeze as deep and as long as the current one. This year is the seventh consecutive year of falling real earnings for UK workers, the TUC claims, a situation, it says, that has no historical precedent. The body, which represents 6 million workers, calculates that there has been an 8% fall in real earnings between 2007 and 2014.

“Living standards today might have improved dramatically since the late 19th century, but workers in 2014 are now into the seventh year of falling real wages and their financial pain is real, with no end to over-stretched household budgets in sight,” said the TUC general secretary, Frances O’Grady. “In 1865 the UK economy had taken a nose-dive following reckless financial speculation in the City and the collapse of a major bank, not dissimilar from the events of 2008,” O’Grady said. “But although pay fell in real terms in that slump of almost 150 years ago, the squeeze on pay that hit Victorian workers only lasted two years.”

Historians claim that not since 1865-67 has there been a comparable squeeze on earnings for British workers. Back then, falling wages were triggered by financial liberalisation that saw the failure of the largest joint stock bank and led to public protests, resulting in the extension of the vote to more than a million working people and the TUC’s founding. Other notable declines in real wages include the global depression of 1874-78, the austerity years of 1921-23 that prefigured the UK’s disastrous return to the gold standard in 1925, and 1976-77, as the economy came out of recession. However, the declines in each of these crises lasted only two to four years, compared with seven years this time. The TUC analysis shows the current pay squeeze is twice as deep as the worst of these episodes, at 8.2%, compared with 4% in the 1920s.