UK workers have missed out on £76-a-week pay rise since financial crisis, report says

‘This was a choice’, union says, urging Rishi Sunak to put higher wages ‘at the heart’ of Spring Statement

Andy Gregory
Saturday 19 March 2022 20:41 GMT
<p>TUC finds UK workers have missed out on thousands in wages compared with international average </p>

TUC finds UK workers have missed out on thousands in wages compared with international average

Workers in the UK would be paid an average of £76 more each week if wage growth had kept pace with an international average since the financial crisis, according to a new report.

But instead real wages in the UK have fallen since 2007 – hitting annual pay packets by £950 on average – despite most Organisation for Economic Co-operation and Development (OECD) countries having achieved significant pay growth over the same period, according to the Trades Union Congress (TUC).

New research by the union – which it says shows the exceptional nature of the UK’s “pay squeeze” – found average annual wages would be £4,000 higher if Britain had kept up with the OECD average since 2007.

Blaming Tory-driven austerity and public sector pay cuts, the union urged Rishi Sunak to “put higher wages at the heart” of his upcoming mini-budget on Wednesday, amid mounting pressure on him to tackle the UK’s deepening cost-of-living crisis.

“Everyone who works for a living ought to earn enough to get by,” said TUC general secretary Frances O’Grady. “Over the last decade, workers in most of the world got a pay rise, but in the UK wages are now worth less than they were before the financial crisis

“This was a choice. Over the last 12 years, Conservative ministers chose to impose austerity, cut public sector pay, and attack workers’ rights to bargain for fair pay through their trade unions. Now these years of weak pay growth have left millions of working families badly exposed to soaring bills and prices. Everything’s going up – but wages.

“Britain needs a pay rise. The Chancellor must put higher wages at the heart of his Spring Statement, and ministers must get unions and employers around the table to negotiate binding fair pay agreements in every sector of the economy to get wages rising.”

The highest rates of annual real pay growth since 2007 have been in the Baltic states – in Lithuania (3.2 per cent), Latvia (2.8 per cent), and Estonia (2.5 per cent), followed by Poland (2.5 per cent) and Slovakia (2.0 per cent), said the TUC.

Countries comparable to the UK in location and industrial development tend to have also done much better than Britain – for example Sweden (1.6 per cent), Norway (1.1 per cent), Germany (1.0 per cent), Denmark (0.9 per cent) and France (0.5 per cent).

Even some of the countries that were hardest hit by the financial crisis have done better than the UK – including Ireland, Iceland and Portugal.

Average annual pay growth in the UK has been -0.2 per cent since 2007, and it is one of just seven out of 33 OECD countries where real pay growth since 2007 is negative, the TUC said.

And in the three months to January, UK workers suffered their biggest fall in real pay for more than eight years, new figures from the Office for National Statistics (ONS) revealed this week.

With rising prices taken into account, as measured by Consumer Prices Index inflation, which is expected to rise as high as 8 per cent, regular pay fell by 1.6 per cent year-on-year during that period, the national statistics agency found.

However the Resolution Foundation has predicted a 4 per cent drop in 2022-23, which would represent the sharpest decline in real incomes since the 1970s.

Despite the Treasury raking in an additional £12.5bn from a “stealth tax” in last year’s Budget due to soaring inflation, according to the Institute for Fiscal Studies, the chancellor plans to hike National Insurance contributions by 1.5 per cent in April.

Research by the Labour Party, shared with The Independent this week, suggests that the UK is the only major world economy to be raising taxes on working people during the cost-of-living crisis.

In measures aimed at getting wages rising and helping families with soaring costs, the TUC is calling on Mr Sunak to boost the minimum wage to at least £10 an hour irrespective of age, use the delayed Employment Bill to give workers and unions new powers to negotiate fair pay, and fund “decent” public sector pay rises for public.

It is also urging the chancellor to improve support for those facing rising energy bills – by implementing a windfall tax on North Sea oil and gas companies’ profits, immediately boosting Universal Credit, replacing his energy loan with a grant, increasing the warm homes discount, and funding a home retrofit programme delivered by local councils. 

Additional reporting by PA

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