Earnings drop by 5% in real terms

Posted on March 28th, 2011 | Categories - News

Workers are taking home about £1000 less each year in their pay packets than they did in 2009.

Above-target inflation means that salaries are not going as far as they used to.

Real-term annual take-home pay has fallen by over a grand from figures recorded less than two years ago, according to BBC Panorama research.

Stagnant wages and high inflation were cited as some of the reasons behind the £1,088 drop in wages.

Data collected by the Centre for Economics and Business Studies showed that the average British employee earned £20,149 at the beginning of this year, indicating a 5% drop from what they earned in the middle of the recession. The research also highlighted that when changes to inflation are taken into account the average take-home pay is less than salary payments recorded in 2004.

David Blanchflower, former monetary policy committee member, 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. And company profits have been also relatively low so the ability of firms to pay has actually prevented wages from rising”.

Some experts said that pay levels have failed to rise in line with inflation because workers are failing to ask for them – they fear unemployment and therefore feel anxious about asking for even a modest pay rise.