Workers hung out to dry

Anxiety over future job and pay prospects has become entrenched among UK workers against a backdrop of falling living standards, Brexit uncertainty and the prospect of automation, the Royal Society of Arts, Manufactures and Commerce said.

Four out of five working people are concerned that inflation will outstrip their pay in future, despite high levels of employment.

The thinktank said anxiety about falling real pay was widespread across all income bands as it warned the link between employment and economic security had been “fundamentally broken” since the 2008 financial crash.

“Having a job is no longer a guarantor of economic security: more than 7 million people in working households live in poverty, wage growth lagged behind inflation for most of the last decade, and close to 8 million people in the UK live with problem debt,” said Atif Shafique, a senior researcher at the RSA. “Ten years after the crash, and we need a step change. Community, place, identity and personal responsibility all have an important role to play.” 

Frances O’Grady, the general secretary of the TUC, said, “Working people are in the middle of the longest pay squeeze since Napoleonic times, with real wages still lower than before the financial crisis.” 

The TUC analysis of figures from the Office for National Statistics found that while UK corporate profitability rose to 12.6% in 2017 from 11.4% in 2007, real wages over the same period fell by 4.4%.

“Working people aren’t getting their fair share. Profitability is up, but real wages are still in freefall,” O’Grady said. “Not only does Britain deserve a pay rise, but this evidence shows that business can afford it too.”

The financial crisis took a heavy toll on UK living standards, as prices roses faster than wages in the six years from 2008. Following a brief respite in 2015 and 2016, falling real pay returned in 2017 as the sharp fall in the value of the pound, triggered by the Brexit vote, drove up the cost of imported goods and fed higher inflation. Inflation rose from 0.5% in June 2016 – the month of the referendum – to 3.1% in November. Wage growth has failed to keep pace, despite low unemployment, and was 2.3% in October.