Resolution Foundation reaction to continued earnings squeeze

The squeeze on earnings has entered its 40th straight month, independent think tank the Resolution Foundation said today.

Data from the Office for National Statistics showed that Average Weekly Earnings (excluding bonuses) grew by 0.9 per cent between February and April compared to a year ago and now stand at £447 a week. The increase is well below inflation, which in the same period stood at 2.9 per cent using RPI and 2.4 per cent CPI.

The last time ONS’s quarterly earnings figures saw a rise above inflation was in October to December 2009.

The more volatile measure of earnings including bonuses rose by 1.3 per cent to £484, seeing a particular jump in monthly data for April 2013, possibly related to behaviour around the cut in the top rate of income tax from 50p to 45p in April.

James Plunkett, Director of Policy at the Resolution Foundation, said: ‘The squeeze we are seeing on wages is remarkable not just for its severity but also its longevity – it adds up to a pressure on earnings that’s unparalleled in recent times, as other studies this week have highlighted.

‘And we know that this trend is almost certain to continue through 2014 and into 2015 before there’s a realistic prospect of wages beginning to recover. Even then it is likely to be several years before wages return to levels seen before the recession.’

ENDS