Wage squeeze worst in modern history says TUC

Worker with money pouch.

The UK’s real wage squeeze will be the worst in modern history and the slowest for 200 years, according to union data.

The Trades Union Congress (TUC) says wages have lagged behind inflation since 2008 and are worth £24 less in real terms than in 2008.

It says they won’t recover until 2025, by which time, it says, workers will have lost £18,500.

The government said its policies had boosted pay for the lowest earners and ensured workers kept more of it.

Next week official figures for employment and average earnings are due. They may show average wage rises have risen above inflation for the first time in a year.

But that will not be enough to overturn the trend seen since the credit crisis.

The TUC compared the current wages squeeze with every major earnings crisis over the past 200 years.

It says this will be the biggest relative real wage loss since Lord Nelson’s day and that even during the Great Depression era and the revival from the Second World War real wages recovered more quickly, in 10 years and seven years respectively.

‘Skipping meals’

The TUC’s report comes as thousands of workers plan to march through London for a new deal for working people.

TUC General Secretary Frances O’Grady is planning to give a speech to the marchers, saying: “UK workers are suffering the worst pay squeeze for two centuries. It’s taking wages longer to recover from this crash than from the Great Depression and Second World War.

“This means families are struggling to get by. Millions of kids are growing up in poverty despite having parents in work. Mums and dads are skipping meals and turning to dodgy lenders to make ends meet.

“That’s why tens of thousands are marching today for a new deal for working people. We need great jobs in every region and nation of the UK, and higher wages for all workers, not just the bosses.”

However a Treasury spokesperson said wages are forecast to grow faster than inflation in each of the next five years and government policies were helping British workers.

“Our National Living Wage has boosted pay for the lowest earners by over £2,000 already, we are cutting taxes to help people keep more of what they earn, and we are making sure people have the skills they need to secure high-quality, well-paid jobs by investing in technical education and boosting apprenticeships,” they said.

The TUC says its figures are based on annual average weekly earnings for total pay (including bonuses) adjusted with the CPI measure of inflation, which are then compared with long-run back data published by the Bank of England.

The forward looking ones are based on the OBR forecast to 2022, and then a projection to 2025 using the average forecast growth rate for the 2018-22 period.