Britons struggling with debt are facing a problem that could impact on their ability to pay back what they owe – a 12-year wage dip.
This is according to the Trades Union Congress (TUC), which has said that not only have employees seen their pay dip in the past three years, but they also face a nine-year wait to see their pay levels return to what they were in real terms in 2009.
Based on TUC research on wage and inflation trends over recent years and forecasts from the Office for Budget Responsibility (OBR), the organisation concludes that an employee on a median salary of £25,000 has lost £1,600 in real terms in the past three years and will be £8,500 worse off over the dozen years of the wage slump.
The OBR forecast is for wages to decline in real terms until next year, with low wage growth thereafter – the post-2015 prediction being for a 0.5 per cent increase in real terms.
General secretary of the TUC Brendan Barber said: "Even when wages start to pick up again it will take years to undo the damage wreaked by austerity and high inflation.
"Unless things change, the UK's 12-year wage dive will continue until 2021 and cost the average worker around £8,500. The loss of income will be even worse for families receiving vital tax credits."
He called for changes in government policy and for future wage growth to be spread more evenly, with less going to the wealthiest.
The current situation has been weakened by the return to recession, but the British Chambers of Commerce (BCC) said this week it believes the UK economy has now returned to growth.
However, it added that this is a fragile situation and BCC chief economist David Kern said the business data in the organisation's third quarter business survey shows that "UK economic performance remains weak and inadequate".
Posted by Paul Thacker