Real wages in the public sector went down 15% between 2008 and 2013. Across the economy real wages have fallen by 8.2%.
Across the economy the average wage rise last year, concentrated in manufacturing and financial services, was just 2% in money terms. Price inflation was 2% (CPI) or 2.7% (RPI). Over half of the wage rises were below RPI. In a sample survey of wage settlements for six million workers between August 2013 and August 2014, 13% faced a wage freeze and only 8.3% had a wage rise above 3%.
In July this year the International Monetary Fund (IMF) predicted that Britain will be the fastest growing advanced economy in 2014. The Office for National Statistics (ONS) declared the economic depression over. This is an economic recovery for the rich.
Britain's richest people are wealthier than ever before, with a combined fortune of almost £520bn for just the top 1000. According to the Sunday Times Rich List the total wealth of the richest 1000 individuals, couples or families jumped 15% between May 2013 and May 2014. Philip Beresford, who compiles the list, said he had never before seen such a “phenomenal” rise in personal fortune.
However most people have suffered a significant drop in living standards. The worst hit have suffered a decline in living standards of over 20%. According to the TUC, full-time UK workers are earning, on average, £2,084 less a year, in real terms, than they were in 2010. That equates to 36 shopping trolleys of food, 28 tanks of fuel for the average car, or a year's energy bill for the average household.
The Tory government feels under very little pressure to raise wages. Instead it intends to improve its image by managing low pay with tax cuts. Now the Tories have promised to raise the personal tax threshold from £10,000 to £12,500 per year by 2020. That is a 3.8% per year rise. The usual increases in the threshold with inflation would take it to £11,600, assuming 2.5% inflation. The Tories say that full time workers on today's minimum wage will not pay income tax in 2020.
But a minimum-wage worker on 40 hours per week gets £13,520 already. With just a 3% per year increase in the minimum wage she or he gets £16,144 gross by 2020, and pays lots of tax.
The lowest paid workers, who are usually part time, are already under the personal tax threshold.
The government has also announced a two-year freeze on working-age benefits.
