Real wages in the UK have suffered an ‘unprecedented’ decline since the financial crisis, according to new research by the National Institute of Economic and Social Research (NIESR).
The study revealed an 8% decline in real wages between 2008 and 2013, with the average employee £2,000 worse off.
The report said:
“The scale of the real wage falls is historically unprecedented, certainly in the past 50 years where broadly comparable records exist.”
For young workers – who have also suffered from rising unemployment since the crash – the fall in wages was almost twice as severe, with a 14% decline.
The report continued:
“For workers aged between 18 and 25, the fall in real wages in the recent period has been so extreme that, in real terms, wages are back to levels not seen since 1998.”
The authors said that one of the potential explanations for this was a shift in part-time working, which could be linked to more young people entering higher education.
This being said, the fall in the 25 to 29-year-old age group was also significant, with real pay falling by 12%, taking levels back to where they were in 1999.
Meaningful improvements are not expected until later this year, with no substantial increases expected until 2016.
Photo by Mark J P