How does your pay compare to the fat cats?

Author
Published date
14 May 2019
Record pay for those who crashed the economy while the rest of us are still counting the cost.
A City executive laughs at his laptop screen
When it comes to real wage rises, City bankers have done best over the last ten years
  • TUC analysis shows real wages for bankers have risen by £6,200 a year since 2009, while the average worker is nearly £1,000 a year worse off.
  • Nurses, teachers and other public sector workers have been hit especially hard, with their real pay down 7.6 per cent over the last decade.

  • Tackling inequality means putting unions in every workplace to bargain for a fair share of the economy’s gains, higher wages and better conditions for all.

Remember when we were ‘all in it together’? That’s what David Cameron promised us when he became prime minister in the aftermath of the biggest financial crisis since the Great Depression.

Ten years on, 8 million people from working households are trapped in poverty, workers are going through the longest squeeze on wages for two hundred years and our hardworking public servants haven’t had a proper pay rise in a decade.

But there’s one group of workers who are doing just fine. And it just so happens to be the same people who crashed the economy in the first place.

According to our research into pay figures from the ONS, real annual wages for bankers have risen by £6,200 (or 9.3 per cent) since 2009.

Meanwhile the typical worker is nearly £1,000 worse off a year than a decade ago.

Nurses, teachers and other public sector workers have been hit especially hard, with their real pay down 7.6 per cent since 2009.

It’s simply not right that the people who played a part in crashing the economy are earning record amounts while most workers are still struggling to make ends meet.

That’s why urgent action is needed to tackle rising inequality in the UK by putting power back in the hands of the people.

That means getting unions into every workplace to bargain for a fair share of the economy’s gains, higher wages and better conditions for all.

What’s in the figures?

The following graph shows a breakdown of changes in real pay by sector over the last decade.

Graph showing real pay change over the past decade, £ per week (2018 prices)
Real pay change over the past decade, £ per week (2018 prices)

The standout winner is the financial and insurance sector, where real pay has risen by £119 per week (or 9.3% and £6,200 on annual pay) over the last ten years.

Pay has also gone up in eight other industries, but the increases are minimal compared to the banking sector. And four of these sectors are low paid in any case, where a rise in the minimum wage is the most likely explanation for the increase.

There’s no hiding from the fact that most sectors have seen a big decrease in pay since 2009. The largest fall is the broad ‘other services’ category (which includes membership organisations, repair services and furnishings), where pay was down a monstrous £86 (18%).

But public sector industries are also near the bottom of the pile. Workers in both ‘education’ and ‘health and social work’ have seen their pay fall by £1,872 a year, while those working in public administration have lost a whopping £2,964.

What does this mean?

The evidence is clear: we were never ‘all in it together’. Hardworking public servants have taken the biggest hit while the bankers who helped caused the crash in the first place took none at all.

Of course, not everyone working in finance is a rich banker. The financial industry is notoriously unequal when it comes to pay differences between top earners and bottom earners, and it has one of the worst gender pay gaps.

The staff in your local bank branch are also more likely to be dealing with closures than big pay rises.

The government talks a good game on reviving pay growth, but the latest figures suggest this has also stalled.

On the usual measure of regular pay, earnings growth in March was down to 3.3 per cent from 3.4 per cent in February. And over the last six months, pay growth has been stuck between 3.3 and 3.5 per cent.

Our research adds to a growing pile of evidence that those who can least afford it have paid the biggest price for the crash.

The latest ASHE (annual survey of hours and earnings) figures show that the top earners are getting hefty pay rises, while increases are pretty static for everyone else – as you can see from the following IFS chart:

Graph showing earnings growth from the Annual Survey of Hours and Earnings
Earnings growth from the Annual Survey of Hours and Earnings

So it’s no surprise that the IFS is launching an investigation into inequality today with a warning that “Inequalities in pay and opportunities in the UK are becoming so extreme they are threatening democracy”.

The injustice is matched only by the failure of this zombie government to do anything about it. Instead, years of austerity have made things worse for millions of workers who were already struggling to make ends meet.

And their constant attacks on trade union rights haven’t helped either. In fact, rising inequality in this country has gone hand in hand with weakening trade union power.

So if we’re to build a fairer country, unions need access to every workplace, stronger rights to bargain for fair pay and conditions, and an end to the unfair and antidemocratic Trade Union Act.

Because the only way to address inequality is to put power back in the hands of the people.