Value of wages lowest in a decade

‘Snakes and ladders’ increases and decreases in the value of wages have left workers with pay packets equivalent to 2003’s value.

Price rises mean the average salary buys you less than at any time since 2003, following 30 years of strong growth.

Workers have suffered three consecutive years of effective wage decline, as any pay increases have been wiped out by inflation. The falls cancel out rises achieved between 2003 and 2009, according to a study by the Office for National Statistics (ONS).

Male workers in private firms have been hit hardest since the recession in 2008. Their average earnings last year were worth less in real terms than in 2002, the research showed.

A similar trend was found in the public sector, although the decline was less marked.

Male workers in the public sector saw their real earnings decline by an average of 2.1% a year between 2010 and 2012, compared with 3.1% in private firms, said the ONS.

John Philpott, director of The Jobs Economist, said: "It's been a 'snakes and ladders' decade for UK workers, with pay climbing higher between 2002 and 2008 before sliding back to square one.

"Median pay in real terms is no higher than it was at the outset of this century and without a return to much lower rates of unemployment looks set to remain anchored to that level for much of the rest of the current decade.

"These figures highlight in particular the relative plight of the fast-growing army of self-employed people. Desperate to avoid the dole, they are engaged in a dog-eat-dog struggle to pick up whatever work is available, forcing the financial reward to self-employment down by 16% in real terms for the UK as a whole since the start of the recession and by as much as a third in London."

Paul Kenny, general secretary of the GMB union, said: "This explains why the economy is heading towards a triple-dip recession. Across the board average incomes are down 12% in real terms since the start of the recession.

"We will see more resistance to pay cuts and against casualised, temporary, poor-paying jobs."

TUC general secretary Frances O'Grady said: "Official figures now confirm what everyone knows - living standards have been falling for the vast majority, and there is no sign of change.

"The challenge for the Government is to reverse austerity and start boosting wages and incomes for the majority."