TUC launches fair pay campaign

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The UK’s overall pay packet was £52bn smaller last year compared to the eve of the recession in 2007, with total pay across some regional economies shrinking by ten per cent, according to a TUC analysis published.

Analysis by the TUC, which is launched a new pay campaign Britain Needs A Pay Rise, shows that on the eve of the recession in 2007 workers across the UK were earning a total of £690bn (in 2012 prices). However, despite rises in employment, a combination of falling real wages, reduced hours and changes in the kind of jobs people are doing has reduced the UK’s total pay packet by 7.5 per cent over the last five years, it says, adding that this represents a real terms annual cut of £52bn in 2012.

The North West experienced the sharpest cut in its overall pay packet between 2007 and 2012 – a fall of 10.6 per cent or £7bn last year. The South West, West Midlands and Scottish economies have also seen employees’ overall pay packets shrink by around ten per cent, according to the analysis.

It shows that the modest rise in the number of people in work since 2007 has failed to offset the sharp real-terms cuts to people’s wages. Overall pay packets were at least £1bn smaller last year in every English region, as well as Scotland and Wales, compared to pre-recession levels, says the TUC.

The TUC believes there are three main reasons for the sharp fall in the nation’s total pay packet; wages failing to keep pace with inflation, a shift towards reduced working hours, including part-time work, and the replacement of middle and relatively well-paid jobs, particularly in the public sector, with lower paid jobs in the private sector.

The TUC is launching a campaign for decent and fair wages across the private and public sectors in the next months, but emphasises that this must be spread evenly across the country and across all levels of workers. In the run-up to the crash, only the top five per cent of earners experienced real wage growth above one per cent, it says.

TUC General Secretary Frances O’Grady said: ‘Over the last five years, people have taken a massive hit in their pay packets, while millions more have had to reduce their hours or take lower paid work. Many people have lost their jobs altogether.

‘Taken together, our pay and jobs crises have shrunk Britain’s total annual pay packet by more than £50bn. It’s no wonder businesses are struggling when so much demand has been sucked out of the economy.

‘Britain’s shrinking wages are hitting people’s living standards, holding back businesses and damaging our growth prospects. Britain desperately needs a pay rise.

‘While economic growth is the key challenge facing the UK today, the years running up to the crash taught us that growth without wage gains just creates more unsustainable debt. Employers and both local and central governments need to recognise the importance of decent wages in delivering sustainable economic growth. They can start by becoming living wage employers and being more transparent about their pay systems.’

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