3rd July 2014
UK workers’ wages hit a high in their late 30s official numbers published today have shown.
According to new data from the Office for National Statistics working Britons are much better off today than they were in 1975.
Employees aged 21 in 1995 earned 40% more by age 39 (in real terms) than those aged 21 in 1975 did by age 39, which may surprise many in their 20s today who are unable to buy a house as a result of soaring prices. However it is also notable that the one major blip in this upward rise in prosperity has occurred since 2009 when real earnings peaked. Average earnings are down by around 11% since then.
Commenting on the stats, Tom McPhail of financial adviser and broker Hargreaves Lansdown says: “It is also interesting to note that since 2011, the largest wage falls have been experienced by the top 10% of earners.
“A further sign of growing equality is the narrowing of the earnings gap between men and women, which is now close to zero up to age 30, though it then grows to 45% at age 49.”
The ONS report found:
That peak earnings now occur for those aged 38, on average, compared to age 29 in 1975, McPhail says this makes sense in terms of increased participation in tertiary education but also validates the shift towards later retirement too.
“The whole adult life journey from education to earning, saving, retiring and spending has shifted further out along the age scale,” he adds.
McPhail says: “It is striking that whilst earnings and living standards are increasing, our savings rates and retirement provision have been falling steadily backwards. Average pension contributions to defined contribution pensions are still below 10% compared to the 16% to 20% which was being paid into final salary schemes up until a few years ago.”
TUC General Secretary Frances O’Grady adds: “The last 40 years show a picture of growing wage inequality. The more you earn, the faster your pay goes up, while the less you earn the slower it goes up. The minimum wage has bucked this trend for the very poorest, but we need to go further.
“A short term fall in inequality from the financial crisis hitting top earners is not the lasting change we need. Now the economy is growing again, the priority must be a pay rise for Britain’s workers. It’s time to build on the minimum wage and bring in living wages to end the injustice of in work poverty.”