Britain enduring poorest real wage performance out of all top G20 powers since 2007, according to ILO


December 2014

Britain enduring poorest real wage performance out of all top G20 powers since 2007, according to ILO

Now is the winter of our austerity, as the International Labour Organisationís (ILO) most recent findings underscore the woeful situation British workers are facing regarding real wage growth.

From 2010 to the end of 2013, Britain has endured the greatest decrease in real wages of all leading G20 countries, with workers taking home less now on average than in 2007, being outstripped by ostensibly economic minnows such as Italy.

In 2011, British real wages fell by 3.5% on the previous year, when Italy ñ a country whose economy has been riddled by political corruption, the crippling Eurozone crisis and record high unemployment levels ñ suffered a mere 1.9% fall in real pay by comparison.

Conversely Australia, Germany and even France saw increases to pre-recession real wage levels, with Australia overseeing staggering wage growth of 109%.

Though the UK has overseen rising employment levels in recent times, the ILOís data lends further weight to the surge in low-income and part-time work forming much of this greater employment, pointing to the flexibility of labour markets in the UK in spite of the paltry pay packets many people are taking home.

The UK is currently undergoing its 6th year in succession characterised by falling real wages, with sizeable increases in low paid labour making up the majority of the new workforce. However, despite this proliferation of low skilled workers, both medium and high skilled workers have seen their wages fall by in between 7% and 14% since 2008ís peak.

Patrick Belser, author of the report & economist at ILO, said: ìIn developed economies, wages have been flat over the last two years. The consequence of that has been slow growth and household consumption. In some countries, like the UK, Italy and Japan, average wages are still below the level where they were before the financial crisis in 2007.î

ìOn the other hand, if you live in an emerging economy, you have probably seen your pay rise, this is particularly the case if you live in China,î said Belser.

Notions of the UKís growing economy are being interpreted as increasingly unviable, as despite positive economic indicators such as rising employment levels and growing levels of unsecured borrowing amongst consumers content to take on debt for luxury purchases, the government has gathered meagre amounts of income tax whilst dishing out benefits to those at the bottom of the work ladder so they may be afforded an adequate standard of living.

The onus has been placed on large scale corporate employers within the UK to step up to the plate and pay their workers higher wages, as the government is expending mass amounts of money on providing extra money to these individuals living hand to mouth, and in doing so failing to realise its primary goal of reducing our national debt.

"At the international level, if too many countries pursue wage moderation policies, the outcome is likely to be negative," Guy Rider, director-general of the ILO, said.

"In the current environment, in which the global economy risks sliding back into a low-growth trap, higher wage growth would be desirable in those countries where wages in the past have lagged behind productivity growth."

Belser also noted that women and foreigners are still being marginalised in real pay terms, with prejudice still at high levels: ìOur report shows that women, migrant workers and workers from other disadvantaged groups frequently earn much less than others, even when they are equally qualified or when they work in the same occupations.î

Whilst wages continue to deteriorate in the UK, income growth has been in fine fettle in many lower-economically developed countries, with Asian countries overseeing average wage growth of 6% since 2007. Although countries such as Brazil have also overseen higher wage growth over the past 7 years, monthly pay is still around a third in poorer countries than in the ëfirst worldí.