Wages rising in ëreal termsí

The majority of workers in the UK have enjoyed an increase in their annual wages in real terms over the last year, according to the government.
It released statistics today that displayed that on average everyone other than the top 10% of earners in the country had seen a rise of 2.5% in their annual income after tax during 2013, which is higher than the 2.4% inflation rate disclosed by the Consumer Price Index.
Labour has questioned the credibility of the data, arguing that it is not conclusive because it has not accounted for the affect benefit changes has had on worker finances, and displays a ëhighly selectiveí trend.
With the 2015 General Election on the near horizon, it appears the Conservative party are attempting to take steps to try and convince households that they are financially better off than they were at the start of the coalitions tenure, though it will likely take more than just a statistic release to ensure that this belief manifests in reality.
The statistics factored in cuts to income tax and national insurance contributions, though the absence of the much talked about benefit cuts will do little do reinforce their credibility. 
The party have identified that they will implement a series of tax cuts in the near future in order to raise the amount workers take home from their annual income, but have warned that the process will take time to take full effect.
Conservative skills and enterprise minister Matthew Hancock said: “Of course, as a consequence of the great recession, people who work hard have been made poorer and times are tough for families as a result.
“That’s why, as part of our long-term economic plan, we are cutting taxes for hardworking people so they have more money in their pockets and are more financially secure.”
This future policy has been confirmed by Prime Minister David Cameron, who has asked for people to patient in order to feel the full effects of the economic initiatives the government has undertaken over the past few years.
Speaking today Mr Cameron said: “We are cutting people’s taxes so we are seeing some positive signs on take-home pay but it’s going to take time and we need to be patient and work through our long-term economic plan so it’s a recovery that really lasts and that benefits everyone.”
However, shadow treasury minister Cathy Jamieson has criticised the data and has argued that all the government has achieved in its current tenure is ensuring a fall in the actual value of wages that workers take home each year.
Ms Jamieson said:”These highly selective figures from the Tories do not even include the impact of things like cuts to tax credits and child benefit which have hit working families hard.”
She highlighted that the average wage for workers in the UK had decreased by £1600 in the past four years, and pointed to data from the Institute for Fiscal studies which displayed that households were almost £900 worse off due to policy changes on benefits since 2010.
With the 2015 election looming large, both parties will attempt to convince the electorate that they have the answer to the recent decline in living standards across the UK, with the latest government announcement being a direct response to Labour criticisms about workers wages. 
The reality is that growth will have to continue at an exceptional rate this year for wages to improve by next year, but even then they will be far worse than they were prior to the recession. 
However, with the IMF upgrading the countryís growth forecast to 2.4% this year, this is highly attainable, and it should not be forgotten that Britain still has one of the fastest growing economies in the Western world.

As such, the final decision on the publicís part on wage improvements will have to be made next year, as a £ 3 average increase in 2013 will do little to convince people that the current administration has done enough to ensure a proper recovery in the UK.  

Leave a Reply

Your email address will not be published. Required fields are marked *