08.06.11

30-Year Income Squeeze on Low and Middle Income Earners

According to the TUC, although the UK economy more than doubled in size over the past 30 years, low and median incomes increased by just 27 and 56 per cent.

Britain’s Livelihood Crisis pamphlet 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, 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.

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