Wages Flatline: Worker's Pay in Four Years Time Will Be the Same as a Decade Ago, in 2001

Eleven Million Low and Middle-income Workers' Pay will 'Flatline' until 2015, Experts Warn

May 27, 2011

Daily Mail - The average wage taken home by 11 million British workers will remain 'roughly the same' until at least 2015, experts have warned.

Think-tank Resolution Foundation said low and middle-income earners were not likely to benefit from the expected economic recovery.

It predicted that workers' pay in four years time would be the same as a decade ago, in 2001.

And it warned that government cuts to tax credits could make the situation even worse.

Stagnating wages, high levels of personal debt and a falling number of 'middle-skilled' jobs were all said to be to blame.

Report author James Plunkett said:

'We all know the recession has hit living standards hard.

'But something deeper has changed in our economy. Even during the so-called boom years, ordinary workers weren't seeing their living standards rise.

'The big question now is what will happen when growth resumes. Will ordinary workers reap any of the benefits? This report suggests that is far from certain.'

The report, based on the analysis of government projections, said people on low to middle incomes had already been losing out during the economic boom years.

It found that, between 2003 and 2008, average wages 'flatlined' and disposable income per head actually fell in every region of England apart from London.

This was despite economic growth of 11 per cent.

The rising cost of living was also said to have hit people on lower incomes harder than other groups.

This was because low to middle earners were facing inflation that was up to one per cent greater than for higher earners since 2006.

It had been compounded by the sharp fall in the number of people in that economic group who owned their own homes.

In 1988, 58 per cent of young people in the group were homeowners, and just 14 per cent rented in the private sector. But by 2008, these proportions had reversed, and only 29 per cent were homeowners with 41 per cent renting privately.

In 2007/08, before the full impact of the credit crunch was felt, 30 per cent of lower earners who did buy their own home did so with a 100 per cent mortgage.

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