25th June 2015
If the typical UK worker’s earnings had grown at the same rate as before the financial crisis in recent years they would be 20% higher claims new research.
The analysis from the Trade Union Congress (TUC) found that if such as scenario had played out, the average worker would be earning £95 more per week – nearly £5,000 extra a year.
The study looked at nominal wage growth and projected actual earnings growth from 2008, at the pre-crisis average rate of 4.4% a year.
Rising productivity is an essential foundation for medium and long-term improvements to wages, urged the TUC, but it noted that eight years of economic under-performance has left productivity 16% below its pre-recession trend.
It said this means there has been less scope for decent pay rises and average pay has fallen well below where it was before the financial crisis. If productivity had recovered more quickly, there would have been more scope for higher wages.
The TUC said that, if the economy is to grow strongly in the future, the government must act to deliver higher productivity; and it must make sure that productivity gains are fairly shared.
The research which forms part of the TUC’s Budget Statement argues that the UK economy could be doing much better than it is today. But the Chancellor’s extreme cuts, and an unbalanced recovery, have resulted “in weak and fragile growth that is reliant on special monetary measures, such as rock-bottom interest rates, and rising household debt”.
TUC general secretary Frances O’Grady said: “The Chancellor can say what he likes in the Budget; the history books already record him as the man who delivered the slowest recovery in modern history.
“The government’s failure to get productivity growing again has hit workers in the pocket, leaving them £100 a week worse off. It’s time the government stopped blaming others for its failure to mend the economy and took responsibility for delivering high productivity growth that everyone shares in.
“A new round of extreme cuts will do nothing to increase productivity and will harm growth and wages. We need strong, sustainable growth, which can only be delivered with a major programme of investment in skills, infrastructure, innovation and high quality public services. As productivity growth is restored, the government must ensure workers get their fair share through higher wages and decent working conditions. Britain’s working people are the true wealth creators and they deserve better than the crumbs from the boardroom table.”