Salaries slump further than UK officials believe

The squeeze on British earnings since the financial crisis could be even worse than official figures indicate, according to a concerning report released this morning.

 

The Resolution Foundation suggests that official measures underestimate the slump in real incomes since 2008 by a fifth, since they do not take into account the boom in self-employed workers. 

 

Including people who work for themselves, the report says average earnings adjusted for inflation dropped by 10 per cent from 2008 to 2012, rather than eight per cent.

 

The authors add that further data suggest that earnings for all workers dropped by between 11.9 and 12.6 per cent from the crisis to the current year, rather than the 10 per cent that official statistics show. 

 

“Important economic and policy decisions are informed by the official data on wages yet, because it does not capture the one in seven workers who are self-employed, it gives a picture that’s incomplete at best and sometimes misleading,” said Laura Gardiner, the paper’s author. The Bank of England has noted that wage growth is an important factor in deciding when interest rates might begin to rise.