Young workers are the biggest victims of the squeeze on wages, according to a new report that maps out British earnings since the financial collapse of 2008.
The research, by the Institute of Fiscal Studies (IFS), adds that while employment rates have returned to a pre-crisis level, real wages remain “well below” their peak for nearly every group. But losses have not been spread out equally: for those aged between 22 and 29, median hourly pay in 2014 was 9 per cent lower than before the great recession; those over 60 and in work found their wages returning back to a pre-crisis level.
The report follows last week’s IFS research that claimed middle to higher income households had actually escaped “remarkably unscathed” from the coalition’s austerity measures. Jonathan Crib, an author of the report, said: “Almost all groups have seen real wages fall since the recession… Women have seen much smaller falls than men. Falls for the low-paid have been somewhat smaller than those on higher pay, driven by trends since 2011.”
Part of the explanation for the report’s gender-divide is that female employees are significantly more likely than men to work in the public sector. And, so far, the mean earnings falls in the public sector have been smaller. While women’s average hourly pay fell by 2.5 per cent in real terms between 2008 and 2014, men’s pay fell by 7.3 per cent.
But this trend is begining to change as private sector wages start to recover and public wages are squeezed as part of the government’s mission to balance the books.
Rachel Reeves, the shadow work and pensions secretary, immediately seizing on the figures said: “This report shows David Cameron has overseen falling wages and rising insecurity in the labour market. Working people are £1,600 worse off a year under the Tories.
Only Labour has the plan to tackle low pay, and to earn our way to rising living standards for all, not just a few as part of our tough but balanced plan to get the deficit down. We will raise the National Minimum Wage to at least £8 an hour, get more homes built, cut business rates for small firms and ensure people are paid a Living Wage.”
Interestingly, the report found that the proportion of part-time workers who say they work part-time because of a lack of available hours is almost double the pre-crisis level.
A spokesperson for HM Treasury said: “This IFS analysis confirms that the UK labour market is continuing to perform strongly. We are seeing a record number of people in work, unemployment falling and wage growth accelerating while inflation falls. UK income equality is now lower than when this government came into office and the gender pay gap is at its lowest since records began. We understand that the impact of the great recession is still being felt and so we’ve cut income tax for 26 million people, frozen fuel duty and frozen council tax. But the job is not done, which is why we must go on working through the plan that is securing a better future across the country.”
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