UK real earnings down for first time since 2014

UK real wages fell for the first time in three years as inflation outpaced earnings, according to the Office of National Statistics.

In a report released by the ONS, it was revealed that weekly earnings for UK workers were up 2.2% to £550 in the year to April 2017, but adjusted for inflation that figure actually declined 0.4% compared with last year.

This is the first fall in real wages since 2014 came as a result of high inflation in april 2017 (2.6%) as opposed to 0.7% in April 2016.

With inflation having overtaken earnings growth for the last six months, next year could be even worse.

However, some economy watchers, such as Bank of England Governor Mark Carney, would note that real wages have long ago collapsed. Last December Carney said Britain is was the midst of "the first lost decade since the 1860s", with real wage growth on a 10-year moving average basis collapsing from a peak in the 1980s and with a dramatic drop in the last 10 years.

Thursday's report from the ONS showed that the lowest-paid workers saw the largest median rise in wages in 2017, with the lowest 10% of workers rising 3.6%.

In other statistics released by the organisation, the gender pay gap was measured to be at 9.1%, the smallest level seen since the survey began in 1997.

“This year saw the joint highest rise since the economic downturn in 2008, in cash terms. However, higher inflation meant real earnings were down overall on the year for the first time since 2014,” said ONS statistician Roger Smith.

“This wasn’t the case for everyone, though – the lowest paid 10 per cent of workers and those in some regions like the East Midlands still saw real increases while other areas saw decreases.”

April's real wages, based on median gross weekly earnings for full-time employees, were actually, argued the TUC, £38 or 7.9% below their 2008 level.

TUC general secretary Frances O’Grady said: “Most families still haven’t recovered from the financial crash, yet their pay packets are now taking another hammering. It’s leaving millions of working people facing hardship and getting deeper into debt."