Five questions answered on longest real wages drop for 50 years

How long have real wages been dropping?

Figures from the Office for National Statistic (ONS) reveal real wages have experienced the longest consecutive drop for 50 years. We answer five questions on the drop in real wages.

How long have real wages been dropping?

They’ve been dropping consistently since 2010, which is the longest period of consecutive depletion since 1964, according to official figures. Overall, real wages have fallen by 2.2 per cent annually since the first three months of 2010.

How are real wages calculated?

Real wages are essentially wages that have been adjusted to factor in the cost of living or with inflation taken into account.

Why are real wages falling?

ONS said reduced output and shorter working hours were to blame. For example, many employees were asked to work shorter hours during the financial crisis rather than making them redundant.

The response to the fall in productivity in 2008 and 2009 was the main reason behind the fall in real wages, it added. It also highlighted the different inflation rate that exists between what is produced and what is consumed.

Are real time wages set to recover soon?

ONS said most recent figures, those released in the third quarter of 2013, showed real wages fell by a drop of 1.5 per cent compared with the same period a year earlier; showing that wages are still continuing to fall.

The Institute for Fiscal Studies produced a report on Thursday which also painted a strained picture. It suggested a mid-range household's income between 2013 and 2014 was 6 per cent below its pre-crisis peak. It added that real wages would not recover before the next general election.

What have the experts said?

"Over the last four years British workers have suffered an unprecedented real wage squeeze," said TUC General Secretary Frances O'Grady told the BBC.

"Even more worryingly, average pay rises have got weaker in every decade since the 1980s, despite increases in productivity, growth and profits. Unless things change, the 2010s could be the first ever decade of falling wages.

"A return to business as usual may only bring modest pay growth. We need radical economic reform to give hard-working people the pay rises they deserve."

For most people in Britain, wages have been dropping. Photograph: Getty Images.

Heidi Vella is a features writer for Nridigital.com

Photo: Getty
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Theresa May is paying the price for mismanaging Boris Johnson

The Foreign Secretary's bruised ego may end up destroying Theresa May. 

And to think that Theresa May scheduled her big speech for this Friday to make sure that Conservative party conference wouldn’t be dominated by the matter of Brexit. Now, thanks to Boris Johnson, it won’t just be her conference, but Labour’s, which is overshadowed by Brexit in general and Tory in-fighting in particular. (One imagines that the Labour leadership will find a way to cope somehow.)

May is paying the price for mismanaging Johnson during her period of political hegemony after she became leader. After he was betrayed by Michael Gove and lacking any particular faction in the parliamentary party, she brought him back from the brink of political death by making him Foreign Secretary, but also used her strength and his weakness to shrink his empire.

The Foreign Office had its responsibility for negotiating Brexit hived off to the newly-created Department for Exiting the European Union (Dexeu) and for navigating post-Brexit trade deals to the Department of International Trade. Johnson was given control of one of the great offices of state, but with no responsibility at all for the greatest foreign policy challenge since the Second World War.

Adding to his discomfort, the new Foreign Secretary was regularly the subject of jokes from the Prime Minister and cabinet colleagues. May likened him to a dog that had to be put down. Philip Hammond quipped about him during his joke-fuelled 2017 Budget. All of which gave Johnson’s allies the impression that Johnson-hunting was a licensed sport as far as Downing Street was concerned. He was then shut out of the election campaign and has continued to be a marginalised figure even as the disappointing election result forced May to involve the wider cabinet in policymaking.

His sense of exclusion from the discussions around May’s Florence speech only added to his sense of isolation. May forgot that if you aren’t going to kill, don’t wound: now, thanks to her lost majority, she can’t afford to put any of the Brexiteers out in the cold, and Johnson is once again where he wants to be: centre-stage. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.