Average UK earnings at 2003 levels, study finds

The average earnings of UK employees have fallen to 2003 levels as inflation outstrips wage increases in cash terms, a report has shown.

The Office for National Statistics found the fall in the median real earnings of full-time public sector staff since 2009 was smaller than in the private sector, with greater wage increases over the seven years following 2002 and a delayed decline after the 2008/9 recession.

A full-time male public sector workers’ real earnings averaged annual declines of 2.1% over 2010/12, while private sector counterparts witnessed a 3.1% yearly reduction over the same period.

Adjusting for inflation, median gross earnings for UK employees in 2009 reached the equivalent of £12.25 an hour in 2012 prices. The ONS found this to be a peak in the real value of pay, with an annual average drop in real pay of nearly 3% charted over 2010/12.

Reporting regional differences, the ONS found employees working in London were earning more than the UK average while median real earnings fell less rapidly in the capital.

Commenting on the figures, TUC general secretary Frances O'Grady said: ‘Official figures now confirm what everyone knows. Living standards have been falling for the vast majority, and there is no sign of change.

‘But on top of the wage squeeze, the Government has been making it worse with cuts to tax credits, the freeze in child benefit and a VAT hike. Millions of low-income families - both in and out of work - are now threatened by the bedroom tax and the one per cent cap on benefits.’

Trade union PCS has reignited its calls for a national pay rise following the ONS report. General secretary Mark Serwotka said: ‘While ministers are not able to directly increase wages across the whole economy, they could and should take action to increase public sector pay that would act as a catalyst for other employers.’