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Average pay back at 2006 levels

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19/10/2017
Average pay back at 2006 levels

The jobs market may be strong but real pay fell by 0.4% in the three months to August, according to official figures.

This takes average wages back to February 2006 levels, according to the Resolution Foundation.

Plus, with the rate of inflation having increased since then, the organisation projects that the pay squeeze will deepen further in the Autumn to around -0.6%. It said workers may have to wait until 2018 for real wage rises to return.

The squeeze comes despite a strong jobs market. Unemployment and economic inactivity are both at 40-year lows, though employment has dipped slightly in the last two months.

Stephen Clarke, economic analyst at the Resolution Foundation, said: “Today’s figures confirm the big picture trend that the UK labour market is great at creating jobs, but terrible at raising people’s pay.

“The scale of the pay squeeze over the last decade is so vast that people today are earning no more than they did back in February 2006, despite the economy being 4.4% bigger per person since then.”

Social mobility stalled

A report out this week from the Social Mobility Commisson backs up the findings. It found that many of Britain’s low-paid workers are permanently stuck in low-paid jobs, and that social mobility in the UK will stall without action.

The analysis finds that just one in six low-paid workers (17%) managed to permanently escape from low pay in the last decade. Meanwhile, a quarter of low-paid workers remained permanently stuck in low pay and nearly half (48%) fluctuated in and out of low pay over the course of the last 10 years.

Women are more likely to be low paid than men and are also far more likely to get stuck in low pay. It is particularly difficult for women in their early twenties to escape low pay, with the lack of good-quality, flexible work to fit alongside childcare responsibilities as the most likely barrier.

The Rt Hon Alan Milburn, chair of the Social Mobility Commission, said: “Britain has an endemic low pay problem. While record numbers of people are in employment, too many jobs are low skilled and low paid. Millions of workers – particularly women – are being trapped in low pay with little chance of escape. The consequences for social mobility are dire.”

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