Workers '£1,088 worse off' than 2009

Workers are more than £1,000 worse off than they were two years ago as their pay has failed to keep pace with increases in the cost of living, research indicates.

The average employee has seen the value of take-home pay dive by 1,088, or 5 per cent, in real terms since the middle of the recession, according to BBC One's Panorama programme.

The study found that average annual salaries were 20,419 once tax had been deducted. But once the impact of inflation was factored in, the buying power of people's pay was actually lower now than in 2004.

Workers in the construction sector have been hit particularly hard, with the value of their take-home pay falling by 1,188 a year in real terms since 2009, while financial intermediaries are 1,212 worse off.

The programme found the squeeze in living standards has been made worse by workers being too afraid of losing their job to ask for a pay rise. David Blanchflower, a former member of the Bank of England's monetary policy committee, said: "One of the bleak things going on right now is that people are very fearful of losing their jobs.

"They're worried about the austerity that's coming, and that's especially true of people in the public sector.

"Unemployment, and the fear that it'll rise further, are what's containing wage pressure right now."