Issue date
12 May 2018
  • TUC warns of ‘slowest wages recovery’ in 200 years
  • Average worker will have lost £18,500 by 2025 TUC estimates
  • Tens of thousands to march in London for ‘new deal’ for working people

UK workers are suffering the longest squeeze on real wages in modern history, new TUC analysis reveals today (Saturday).

A decade on from the financial crisis real wages are still worth £24 a week less than in 2008.  And they are not forecast to return to their pre-crash level until 2025.  

By this point real wages will have been in decline for 17 years.

Slowest wages recovery in two centuries

The current period of wage stagnation is the worst for two centuries. Not since the beginning of the 18th century (when it took 24 years), has it taken so long for real wages to recover from a slump.

The TUC compared the current wages squeeze with every major earnings crisis over the past 200 years. Even during the Great Depression era (10 years) and revival from the Second World War (7 years) real wages recovered more quickly.  

Period

Total Length of real wage decline (years)

Estimated total loss (compared to wages keeping up with inflation) in 2018 prices

1798-1822

24

-£76,200

1822-1833

11

-£18,200

1835-1843

8

-£17,500

1843-1851

8

-£8,100

1851-1863

12

-£16,000

1865-1869

4

-£3,900

1907-1913

6

-£1,600

1921-1931

10

-£12,300

1943-1950

7

-£3,800

2008-2025

17

-£18,500

The TUC estimates that as a result of pay not keeping pace with the cost of living, by 2025 the average worker will have lost out on around £18,500 in real earnings.

This will be the biggest relative real wage loss since Lord Nelson roamed the seas, dwarfing anything seen over the last century.

Real wages increased by 27% in the decade before the financial crisis (1998-2008). However, in the decade since (2008-18) they have fallen by 4%.

Thousands to march in London

The analysis is published as tens of thousands of people prepare to march through London as part of the TUC’s ‘New Deal for Working People’.

Labour Leader Jeremy Corbyn will address a rally at Hyde Park. And there will be speeches by union leaders and frontline workers.

TUC General Secretary Frances O’Grady will tell marchers today:

“UK workers are suffering the worst pay squeeze for two centuries. It’s taking wages longer to recover from this crash than from the great depression and second world war.

“This means families are struggling to get by. Millions of kids are growing up in poverty despite having parents in work. Mums and dads are skipping meals and turning to dodgy lenders to make ends meet.

“That’s why tens of thousands are marching today for a new deal for working people. We need great jobs in every region and nation of the UK, and higher wages for all workers, not just the bosses.”

Editors note
  • Today’s march will set off from Embankment at approximately midday. The route will go along Northumberland Avenue, across Trafalgar Square, along Regent Street to Piccadilly Circus, and then along Piccadilly to Hyde Park Corner, where it will enter the Park.
  • The rally in Hyde Park will start at approximately 1.15pm.
  • Real wage ‘squeezes’ are defined as episodes of falling real wages lasting more than one year.
  • Figures are based on the annual Average Weekly Earnings for total pay (including bonuses) adjusted with CPI. These ONS figures are compared with long-run back data published by the Bank of England on their ‘A millennium of macroeconomic data’ spreadsheet.
  • 2018 to 2025 are based on the OBR forecast to 2022 and then a projection to 2025 using the average forecast growth rate over 2018 to 2022.
  • Cash figures for the decline from the pre-crisis peak and estimated total loss are based on 2018 prices.
  • The cash figures for estimated total loss are indicative. They show what the current wage squeeze would look like if it had followed the same trends of previous real wage crises.