Yahoo Finance UK workers have lost £9,200 a year in wages since 2008
Lack of pay increases is driving the country's living standards slump with the average UK worker losing £9,200 per year since the financial crisis of 2008.
With salaries stagnating and inflation running rampant, UK households are squeezed, particularly those who pay rent and those with young children, according to the Resolution Foundation.
Household disposable income growth for working age families has plunged to just 0.7% a year in the 15 years leading up to the COVID pandemic.
The Foundation’s 14th annual Living Standards Audit said “too many families today” have to cope with low disposable incomes and little or no private savings. Over one in four have less than a month’s worth of financial buffer.
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The figures also show a slump in living standards across the UK. Between 1961 and 2004-05, typical household incomes for non-pensioners grew by 2.3% per year, on average, or 25% per decade.
Between 2004-05 and 2019-20 however, typical income growth slowed to just 0.7% cent per year.
The incomes of the poorest fifth of the population were no higher on the eve of the pandemic than they were back in 2004-05, despite GDP per person growing by 12% over this period.
Pay is the main driver behind the UK’s living standards slump. “Typical wages are no higher today than they were before the financial crisis, representing a wage loss of £9,200 per year, compared to a world in which pay growth had continued its pre-financial crisis trend,” the report said.
“Households across Britain — and across many other countries — are currently grappling with high levels of inflation that we haven’t seen for generations,” Adam Corlett, principal economist at the Resolution Foundation, said.
“But while many of the causes of the current crisis are global in nature, it is Britain’s recent history of low income growth and high inequality that has left so many households really struggling to cope."
On the eve of the pandemic, the typical household income of families in social and private rented accommodation was 37% and 24% below overall typical income respectively.
Read more: UK shop prices jump at the fastest pace in almost 14 years
The incomes of single parents were 35% lower, while the household incomes of children under the age of five were 20% lower.
“Britain’s poor recent record on living standards — notably the complete collapse of income growth for poor households over the past 20 years — must be turned around in the decade ahead.
“To do that, we must address our failure to raise pay and productivity levels, strengthen our social safety net, reduce housing costs and build on what we’ve done well — such as boosting employment for lower-income households,” Corlett added.
