Workers £11,000 worse off a year due to stagnant wages

Workers are £11,000 worse off per year due to 15 years of wage stagnation, according to new research.

The Resolution Foundation think tank calculated that had wages continued to grow at the pace seen before the 2008 financial crash, the average worker would have made £11,000 more per year than they do now, after taking rising prices into account.

Torsten Bell, chief executive of the Resolution Foundation, told the BBC the wage stagnation of the past 15 years is “almost completely unprecedented”.

He said: “Nobody who’s alive and working in the British economy today has ever seen anything like this. This is definitely not what normal looks like. This is what failure looks like.”

The think tank also found that typical UK household incomes have fallen further behind those in Germany: in 2008, the gap was more than £500 a year, now it is £4,000.

A Treasury spokesman told the broadcaster the Government was increasing incentives for investment and pointed to low unemployment and its plan to increase growth as signs that the country was on the right track. Last week a report said that Britain’s economy would not shrink by as much as previously feared but will still deliver the worst performance of any advanced country this year.

In its interim assessment of the global economic outlook titled “A Fragile Recovery”, the Organisation for Economic Co-operation and Development said UK GDP would fall by 0.2 per cent in 2023. Although that is an improvement on its November forecast of a drop of 0.4 per cent, the OECD found Britain would be the only major economy in the world to contract this year, with the US, Germany, France and Italy all set to grow.

Chancellor Jeremy Hunt delivered an upbeat assessment of Britain’s short-term prospects in his Budget last week but has since faced warnings that the country is in the grip of a “lost decade” on living standards.