Falling real wages hit new lows

Average weekly wages have fallen to their lowest level since measures began in 2001 independent think tank the Resolution Foundation pointed out today.

Official figures from the Office for National Statistics showed that the average regular weekly wage (excluding bonuses) was £447 in August. Adjusting for inflation (using the RPI measure) this is the lowest level in real terms since records began in 2001. Using the different CPI rate of inflation, earnings are back to a level last seen in November 2003. Under the new RPIJ measure of inflation, earnings are also back to a level last seen in January 2003.

The figures released today show that average regular pay rose by 0.8 per cent comparing June to August 2013 with the same period a year earlier. This is well behind prices, which in August grew by 2.7 per cent (CPI) and 3.3 per cent (RPI) compared with a year earlier.

Today’s figures showed the labour market performing more strongly – rising by 155,000 to almost 30 million and with the number of people unemployed falling by 18,000 when comparing June to August with the previous quarter. The employment rate again showed a strong performance, rising 0.3 percentage points compared with March to May 2013 for those aged from 16 to 64, reaching 71.7 per cent.

James Plunkett, director of policy at the Resolution Foundation, said:

“It is now well-established that this has been a tough downturn for wages. The fall in real wages we’ve seen has been unprecedented. But perhaps most worrying today is that there’s still no sign of the wage squeeze ending – despite some better economic news, the gap between pay and prices is wider now than it was a year ago.

On the upside, the employment picture continues to be strong. But even here we can’t afford complacency – there’s still a long way to go to just to restore the employment rate of 2008.”

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