TUC Report: Nation's Pay Falls £52bn In Five Years
TUC report: Nation's pay falls £52bn in five years with North West suffering sharpest cuts
Britain's pay packets have shrunk by £52 billion in five years creating a massive blackhole in the economy, a study reveals today.
A toxic combination of falling real wages, reduced hours and changes in the kind jobs people are doing has reduced the nation’s total pay packet by 7.5% on average since the eve of the recession in 2007.
TUC analysis of official figures found that workers in the North West suffered the sharpest cut in pay packets - a fall of 10.6% or £7bn last year.
The South West, West Midlands and Scottish economies have also seen employees’ overall pay packets shrink by around 10%.
The TUC’s report, published to launch its new campaign, Britain Needs A Pay Rise, says shrinking pay packets are bad for workers and their families and bad for local businesses.
The TUC says if people have less money and are spending less, businesses will struggle.
Despite a small rise in the numnber of peoole in work since 2007, it has failed to offset the sharp cuts to workers’ wages.
In 2007 workers were earning a total of £690 billion, but by last year the figure was down to £638bn, and the TUC says Britain desperately needs a pay rise to kickstart the economy.
But the TUC says raising Britain’s pay packets will only help the economy if wage gains are spread evenly across the country and ordinary workers rather than bosses reap the benefits.
In the run up to the economic crash only the top 5% of earners enjoyed real wage growth above 1% and the TUC is calling for greater pay transparency and role for workers in setting boardroom pay.
The TUC identifies three main reasons for the sharp fall in the nation’s total pay packet; wages failing to keep pace with inflation, a shift towards reduced working hours, including part-time work and middle ranking and relatively well-paid jobs in the public sector being replaced with lower-paid work in the private sector.
Frances O’Grady, TUC general secretary, said: “Over the last five years, people have taken a massive hit in their pay packets, while millions more have had to reduce their hours or take lower paid work. Many people have lost their jobs altogether.
“Taken together, our pay and jobs crises have shrunk Britain’s total annual pay packet by more than £50bn. It’s no wonder businesses are struggling when so much demand has been sucked out of the economy.
“Britain’s shrinking wages are hitting people’s living standards, holding back businesses and damaging our growth prospects. Britain desperately needs a pay rise.
“While economic growth is the key challenge facing the UK today, the years running up to the crash taught us that growth without wage gains just creates more unsustainable debt.
“Employers and both local and central governments need to recognise the importance of decent wages in delivering sustainable economic growth. They can start by becoming living wage employers and being more transparent about their pay systems.”
How your region has fared
Regions annual pay 2007.(£000s) annual pay 2012 change change in total annual pay
North East 24,305,396 23,084,884 -£1,220,512 -5.0%
North West 71,474,348 63,871,040 -£7,603,308 -10.6%
Yorkshire and the Humber 54,251,062 49,642,944 -£4,608,118 -8.5%
East Midlands 47,118,347 43,489,456 -£3,628,891 -7.7%
West Midlands 55,700,876 50,298,768 -£5,402,108 -9.7%
East 68,825,890 65,480,034 -£3,345,856 -4.9%
London 114,742,505 110,264,000 -£4,478,505 -3.9%
South East 109,797,129 101,784,000 -£8,013,129 -7.3%
South West 57,026,908 51,281,766 -£5,745,142 -10.1%
Wales 28,496,683 26,193,875 -£2,302,808 -8.1%
Scotland 57,369,008 51,796,890 -£5,572,118 -9.7%
Northern Ireland 15,738,230 14,986,044 -£752,186 -4.8%