Wage crisis as fall in wages puts Britain in Europe’s bottom four

August 14, 2013

Luke-Notley small (Custom)UK workers have suffered one of the sharpest falls in wages among European countries over the last three years, according to recently released figures collated by the House of Commons Library.

The figures show a 5.5 per cent drop in average hourly wages after inflation since 2010, meaning British workers have felt the squeeze more than countries including Spain and Cyprus, who were hit by the Eurozone crisis but still suffered a smaller percentage drop in wages over the same period. The figures show that only crisis-hit Greece, Portugal and the Netherlands are doing worse. Meanwhile in Germany hourly wages rose by 2.7 per cent over the same period and in France there was a 0.4 per cent increase.

Shadow Treasury minister Cathy Jamieson, said: “These figures show the full scale of David Cameron’s cost of living crisis. Working people are not only worse off under the Tories, we’re also doing much worse than almost all other EU countries.

“Despite out of touch claims by ministers, life is getting harder for ordinary families as prices continue rising faster than wages. People on middle and low incomes have also seen tax rises and cuts to tax credits, while millionaires have been given a huge tax cut,” she said.

“Ministers keep talking about the global race, but when it comes to living standards it’s clear we’re losing. David Cameron and George Osborne’s economic policies have badly failed over the last three years and working people are paying a heavy price.

“Labour would help middle and low income families right now, including with a lower 10p starting rate of tax, action to tackle soaring energy bills and protecting tax credits for working families by reversing the tax cut for millionaires.”

Professor John Van Reenen, director of the Centre for Economic Performance at the London School of Economics, said the fall in real wages in the UK was “something that did not happen in previous postwar recessions in Britain”.  He linked the weak performance to falling GDP and national income, “which is now 3.5 per cent smaller than it was before the financial crisis”.

He added: “Labour is right to say that if the Government had pursued better policies, such as not cutting investment so dramatically since 2010, then growth would have been better and living standards higher.”

GMB union general secretary Paul Kenny said: “The Government is directly responsible for this unprecedented fall in the real value of wages in the three years since the election.

“Employers paying low wages get taxpayer subsidies in the form of tax credits to assemble a workforce for them to make decent profit margins. The Government has also made it easier for employers to abuse staff and made it more difficult for them to do anything about it.”

By contrast Treasury Secretary Sajid Javid said in this week’s Daily Telegraph that the UK economy has “regained momentum” and a full-blown economy recovery is now under way in Britain.

Mr Javid claimed that Britain was now “out of intensive care”.

The inability to agree who is blame means the economy is likely to become the focus for the next two years leading up to the next general election.