Government accused of ignoring living standards crisis as wages stagnate despite rise in employment

Think tank warns too many people in 'low paid and insecure' work with wages £13 lower per week than they were 10 years ago

Unions have accused the government of turning a blind eye to Britain’s “living standards crisis”, with wages stagnating over the last decade despite a jump in the number of people in employment, according to new figures from the Resolution Foundation.

The think tank found that people in the poorest third of UK households make up more than half of the increase in employment seen since the beginning of the financial crisis.

Of a 2.1 million increase in employment between 2008-2009 and 2016-2017, 1.2 million came from the bottom third of households in terms of income, with 360,000 added in the middle third and 540,000 in the top.

However, the foundation said that while higher employment had given a boost to living standards, this was offset by “widespread insecurity” with 800,000 workers still on zero hours contracts. The think tank said there was also a “dire performance on pay”, with real average earnings still £13 a week lower than they were a decade ago.

These findings tally with official figures published earlier this month showing that wage growth fell unexpectedly in June, in spite of a reduced unemployment rate, and come one day after the government reported its biggest budget surplus in 18 years.

In July the Resolution Foundation said the incomes of the poorest households in the UK had slumped last year due to benefit cuts and rising inflation, leading to the largest rise in poverty since Margaret Thatcher was in power.

“Lower income families have accounted for the majority of Britain’s jobs growth, showing that pushing for full employment can boost living standards,” said Stephen Clarke, senior economic analyst at the Resolution Foundation.

“But while employment is at a record high, Britain is still some way off full employment and too much work remains low paid and insecure. With fewer than half of people with a disability or ill health currently in work, targeted support for these groups holds the key to achieving further employment progress.”

Mr Clarke added: “Steps to provide advance notice of shifts, and a right to a regular contract for those working regular hours on a zero hour contract, would also help those in work who have precious little job security.”

The TUC’s general secretary Frances O’Grady said: “It’s taking wages longer to recover from this crash than it did after the Great Depression. The government is turning a blind eye to Britain’s living standards crisis. Ministers must get wages rising faster now.”

The Resolution Foundation’s findings also showed that, as well as benefiting lower income households, employment growth has also been good for other groups who have traditionally struggled to find work, such as ethnic minorities and people with disabilities.

In the past 10 years ethnic minority workers have accounted for 47 per cent of the increase in employment, and those with low level qualifications for 43 per cent.

However, the think tank said many disadvantaged groups still face ‘employment gaps’, and advised that targeted support will be needed to help them find work and aid Britain in reaching full employment.

The foundation said specific policies should be adopted to boost the employment prospects of people with a disability or ill health, of whom just 45 per cent were in work last year.