Britain's workers are more than £1,000 worse off than they were two years ago as their pay has failed to keep pace with rises in the cost of living, research indicated today.
The average employee has seen the value of their take-home pay dive by £1,088, or 5 per cent, in real terms since the middle of the recession, according to the BBC1 programme Panorama.
The study found average annual salaries were £20,419 after tax had been deducted, but once the impact of inflation was factored in, the buying power of people' pay was lower than in 2004.
Workers in the construction sector have been hit hard, with the value of their take-home pay falling by £1,188 a year in real terms since 2009, while financial intermediaries are £1,212 worse off. The programme found the squeeze in people's living standards has been made worse by workers being too afraid of losing their job to ask for a pay rise.
David Blanchflower, a former member of the Bank of England's Monetary Policy Committee, told Panorama: "One of the bleak things going on right now is that people are very fearful of losing their jobs. They're worried about the austerity that's coming, and that's especially true of people in the public sector.
"So unemployment and the fear that it'll rise further, is what's containing wage pressure right now. And company profits have been also relatively low, so the ability of firms to pay has actually prevented wages from rising."
Research also found an estimated 659,000 households are already struggling with their mortgage payments, while around 117,000 people are in arrears.
It is thought a further 36,000 households would struggle if interest rates were to rise by 1 per cent to 1.5 per cent, while 179,000 people would have trouble keeping up with repayments if rates returned to their pre-credit crunch level of 5 per cent, plunging an additional 17,000 people into arrears.
Panorama: The Big Squeeze is on BBC One on Monday at 8.30pm.
Amount lost each month
£101 * Financial intermediaries (eg bank tellers)
£99 * Workers in the construction sector
£91 * Estate agents (including rental agents)
£62 * Transport, storage and communications workers
£48 * Productive industries (eg oil, manufacturing)
£45 * Public sector workers (local and national government) Vocalink/CEBR; year to January
Panorama: The Big Squeeze is on BBC One on Monday at 8.30pm.Research was carried out for Panorama by the Centre for Economics and Business Research and the Institute of Social and Economic Research.Reuse content