Low and middle income earners have suffered a 30 year income squeeze

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date: Friday 3 June 2011

embargo: 00.01hrs Monday 6 June 2011

Low and median incomes increased by just 27 and 56 per cent in the 30 years up to the recent recession, despite the UK economy more than doubling in size over the same period, according to a new TUC report published today (Monday).

Britain's Livelihood Crisis, the latest TUC touchstone pamphlet authored by Stewart Lansley, shows that while the recession is often cited as the cause of today's tough income squeeze, a livelihood crisis has been brewing in Britain for three decades, held off only by an unsustainable rise in personal debt.

The pamphlet shows that wages have been falling sharply as a share of the national wealth since the mid-70s, while a rich minority have been taking an ever larger slice of the UK's dwindling earnings cake. The top 10 per cent of earners are the only group whose incomes have risen in line with GDP since 1978, seeing their pay increase almost twice as fast as median incomes, and nearly four times faster than the lowest 10 per cent of earners.

Britain's Livelihood Crisis highlights a sharp divide in earnings growth between professions. The real wages (adjusted for inflation) of medical practitioners (+153 per cent), judges, barristers and solicitors (+114 per cent) have more than doubled since 1978, while those of bakers (-1 per cent), forklift truck drivers (-5 per cent), packers and bottlers (-3 per cent) actually fell.

The pamphlet argues that the decline in middle-paid and skilled jobs and the deterioration of employment conditions has led to a 'hollowing out of the middle' of the labour market and a steady growth in 'bad jobs' offering poor wages and job security.

The growth of poorly paid work is illustrated by the proportion of workers whose wages are at least a third less than the median (currently £11.09 an hour). This figure has almost doubled in the last three decades from 12 per cent in 1977 to 22 per cent in 2009, says the report.

With the recent recession further depressing wages, which are predicted to trail behind inflation for several years to come, a significant proportion of workers have received little if any financial benefit from the doubling in size of the British economy in the last three decades, the TUC argues.

The embrace of market capitalism by successive governments - and the ensuing waves of downsizing, restructuring and short-termism that have accompanied it - has been the main catalyst for the Britain's current livelihood crisis, says the TUC.

The pamphlet argues against a return to the 1970s model of weak corporatism and poorly targeted industrial activism and calls for a new economic model, with a recast role for the state, a greater emphasis on wealth and job creation, and a fairer distribution of the national cake. This is the only sustainable way to tackle our livelihood crisis, the TUC says.

TUC General Secretary Brendan Barber said: 'Britain has got much wealthier over the last three decades. But while a small financial elite have grabbed an ever larger share for themselves, many people on low and middle incomes have seen barely any improvement in their incomes, while some have even seen their take home pay fall.

'People often cite the recession as the source of this income squeeze, but a livelihood crisis has been brewing in Britain for decades. The financial crash has exposed decades of limp wage growth, offset by soaring household debt.

'The financial crisis should have led to a fundamental economic rethink but instead our discredited model of market capitalism has somehow emerged unscathed. And far from making the changes that we need the coalition is instead introducing more punitive measures against those on low and middle incomes.

'Unless we radically transform our economy - from recasting the role of the state to prioritising a fairer distribution of new wealth and jobs - we will simply be storing up more problems for the future.'

Author of Britain's Livelihood Crisis Stewart Lansley said: 'Up to a third of those of working age are facing a deepening livelihood crisis, one which has brought weakening job opportunities, low living standards and a range of new economic uncertainties compared with the immediate post-war decades.

'Not only do many of those caught in this crisis have little or no prospect of escape, their children are likely to face an even more uncertain economic future.'

NOTES TO EDITORS:

Change in earnings, 1978-2008 by profession

Profession

Change in earnings, (per cent)

Medical practitioners

153

Judges, barristers, solicitors

114

Secondary school teachers

67

Quantity surveyors

65

Accountants

60

Welfare/social workers

60

Electrical and electronic engineers

55

Bricklayers

37

Architects; town planners

36

Mechanical engineers

34

Skilled motor mechanics

34

Carpenters and joiners

30

Plasterers

30

Toolmakers/tool fitters

21

Heavy goods vehicle drivers

19

Bus and coach drivers

11

Sheet metal workers

8

Bakers

-1

Packers, bottlers, fillers, canners

-3

Fork lift truck drivers

-5

Median

56

Earnings growth by income group

Income group

Change in earnings, (per cent)

Top ten per cent (90th percentile)

105

Median

56

Bottom ten per cent (10th percentile)

27

Sources: New Earnings Survey for 1978, Annual Survey of Hours and Earnings for 2008

- Between 1978 and 2008 Real GDP increased by 108 per cent.

- Britain's Livelihood Crisis is available to download under embargo for 00.01hrs Monday 6 June at www.tuc.org.uk/tucfiles/28/Britains_Livelihood_Crisis.pdf

- Hard copies of the report cost £10 and can be purchased from the TUC publications office at www.tuc.org.uk/publications or by phoning Steve Mills on 020 7467 1294.

- All TUC press releases can be found at www.tuc.org.uk

- Register for the TUC's press extranet: a service exclusive to journalists wanting to access pre-embargo releases and reports from the TUC. Visit www.tuc.org.uk/pressextranet

Contacts:

Media enquiries:
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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