Wage levels fall for longest period in 50 years

Salaries have fallen to a 16-month low, dropping by more than £2,100 in the past year, according to new research. Picture: PA

According to the Office for National Statistics (ONS), wages have hit minus 2.2 per cent on average since the first quarter of 2010, the last quarter before the Tory-Lib Dem coalition came to power.

Wages went up on average in just one month since Prime Minister David Cameron entered 10 Downing Street.

The ONS said that, in comparison, wage growth averaged 2.9 per cent in the 1970s and 1980s, 1.5 per cent in the 1990s, and 1.2 per cent in the 2000s.

The figures have come as Labour attempts to refocus the economic debate on the rising cost of living in a week where the government has been buoyed by figures showing the economy grew by 2.9 per cent in the last year.

However, it also followed an analysis paper commissioned by Lib Dem Chief Secretary to the Treasury, Danny Alexander, claiming Labour’s economic plans would add £166 billion to the UK’s deficit.

Labour’s shadow chief secretary to the Treasury, Chris Leslie, said: “The Tories are so out of touch, they deny there’s a cost of living crisis, but these figures show the biggest fall in real wages since records began 50 years ago.

“Wages after inflation have fallen by 2.2 per cent a year since 2010. But while working people are worse off under David Cameron, he has chosen this time to give the richest 1 per cent of earners a huge tax cut.”

However, the government came out fighting last night, arguing that the fall in wages was a direct result of the economic crash in 2008 during the last Labour government.

The government said last week that most British workers had seen their take-home pay rise in real terms in the past year.

According to the ONS, low productivity growth seems to be pushing wages down .

The study followed a report by the Institute for Fiscal Studies (IFS) which said that while the fall in household incomes had now probably come to a halt, living standards were still “dramatically” down on what they were before the global financial crisis hit in 2008.

Union leaders said that the government position on the cost of living was “complacent”.

Unite general-secretary Len McCluskey said: “These figures expose the government’s shocking complacency. The bald truth is the cost of living in this country is vastly outstripping wages. David Cameron has presided over horrific price rises in essentials like food, fuel and travel but he’s done nothing to alleviate this pain.”

TUC general-secretary Frances O’Grady said: “Over the last four years, British workers have suffered an unprecedented real-wage squeeze.

“Average pay rises have been getter weaker in every decade since the 1980s, despite increases in productivity and profits.

SNP Treasury spokesperson Stewart Hosie demanded the Chancellor back up his promises on increasing the minimum wage and said more was being done by the SNP in Scotland to tackle the rising cost of living.