Real pay cut for millions since 2010, TUC study suggests

A bricklayer in Bristol — Image caption The TUC said construction jobs were among the middle-income roles which were squeezed

Pay rates have effectively fallen for the UK’s lower and middle income earners since 2010, research suggests.

Workers in jobs paying between £9.56 and £12.73 an hour have seen their “real” wage fall 1% since 2010 after inflation is accounted for, analysis by the Trades Union Congress (TUC) found.

However, the lowest-paid workers have seen average real pay rates increase 5%, thanks to minimum wage rises.

Ministers say all workers saw income tax cuts and real pay was now rising.

Real wage rates adjust the hourly rate for the effect of inflation, the average increase in the cost of goods and services, which erode the spending power of your money.

‘Middle earners squeezed’

Image copyright Getty Images

Image caption The TUC says lower and middle income earners may have seen their spending money squeezed

The pay rate analysis identifies middle income earners, those earning near the median wage rate of £12.73 per hour, as having their earning power eroded since 2010.

This 1% reduction in pay rates compares to a rise of 7% for this group of 7.7 million workers between 2002 and 2010, the TUC analysis argues.

For workers earning between the median wage rate of £12.73 and £25.45 per hour, pay rates have on average fallen 3% in the period.

The TUC analysis shows the 1.1 million highest income earners, banking above £25.45 per hour worked, saw average pay rates rise 4% since 2010.

‘Increased costs’

Kate Bell from the TUC says median wages still are not where they were before the financial crisis “so a little bit of pay pick-up in the last couple of months… doesn’t mean we’re out of the woods yet”.

Ms Bell added: “People in middle earning jobs have seen their pay fall. Jobs like those in construction, the local government in administrative jobs for example you’ve likely seen your pay go down over this period. That has an impact on your ability to live and ability to pay your bills”.

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Image caption Some larger employers have faced increased workforce costs such as the apprentice levy

The most recent ONS data on employment and earnings for the year to 31 May showed a record 32.75 million people in work and average wage growth for the year at 3.8%, the highest since the financial crisis in 2008.

ONS data showed wage growth has been outpacing the inflation rate since March 2018, meaning the spending power of salaries is not being eroded by price rises in shops.

The head of the Recruitment and Employment Confederation, Neil Carberry, said businesses have faced increased costs since 2010 such as the apprenticeship levy and pension auto-enrolment.

Mr Carberry said boosting the UK’s lagging workplace productivity was key to improving wages and salaries for employees.

Shadow chancellor John McDonnell said: “It’s staggering that millions of people have faced cuts to their real pay since 2010 while the highest earners have had their pay skyrocket.”

He said a Labour Government would introduce a real living wage of at least £10 an hour and give trade unions more power to end the “scandal” of low pay.

A Treasury spokesman said: “Real wages are now rising on a sustainable basis for the first time in a decade.

“We have given the lowest paid a pay rise of almost 5% by increasing the National Living Wage, cut income tax for 32 million people and taken 1.74 million people out of income tax.

“We are also helping with the cost of living by freezing fuel duty and doubling free child care for working parents of three and four year olds.”

Conservative deputy chairman Paul Scully added: “The facts are that under the Conservatives, the unemployment rate – and the proportion of low paid workers – have both fallen to a record low, and our National Living Wage is delivering pay rises for millions of people across the country”.