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In 2012, the UK's overall pay packet was £52 billion smaller compared to the eve of the recession in 2007, with total pay across some regional economies shrinking by as much as -10%, according to an analysis by the TUC union.
The analysis of official figures shows that in 2007 workers across the UK were earning a total of £690 billion with a fall in real wages and reduced hours leading to an overall pay packet of £638 billion in 2012, a reduction of -7.5%.
The North West experienced the sharpest cut in its overall pay packet between 2007 and 2012 – a fall of 10.6% or £7 billion last year. The South West, West Midlands and Scottish economies have also seen employees' overall pay packets shrink by around -10%.
The analysis shows that the 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 £1 billion smaller last year in every English region, as well as Scotland and Wales, compared to pre-recession levels.
The TUC argues that Britain's shrinking pay packet is bad for workers and businesses. It blames the pay packet fall on a number of factors, such as wages failing to keep pace with inflation, a shift towards reduced working hours, and the replacement of middle and relatively well-paid jobs with lower paid jobs in the private sector.
TUC General Secretary, Frances O'Grady, said people have taken a massive hit in their pay packets over the past five years. “It's no wonder businesses are struggling when so much demand has been sucked out of the economy. Britain desperately needs a pay rise,” he said.