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Drop in real wages - Living standards squeezed.
grizzly1911
Posts: 9,965 Forumite
Living standards squeeze continues in UK, says IFS
"Average UK living standards have fallen "dramatically" since the recession and will not reach pre-crisis levels by the next election, economists have said.
The Institute for Fiscal Studies (IFS) calculated that a mid-range household's income between 2013 and 2014 was 6% below its pre-crisis peak.
This was felt equally across high and low income groups when the cost of living was taken into account.
But those on low incomes could feel the squeeze more in the coming years.
This was the result of further cuts to benefits and tax credits, the IFS said.
The findings will further fuel the political debate about the UK's economic recovery and whether this will benefit all groups of society equally. The IFS suggested that, so far, this debate had suffered from a lack of up-to-date information."
"However, the IFS said that those with relatively high incomes had benefitted from cheaper mortgage rates.
In contrast, rising food and energy prices, which formed a bigger proportion of the spending of poorer households, had risen faster than the average cost of living measured by inflation.
The report said that inflation between 2008 and 2013 was 20%, while energy prices rose by 60% and food prices were up by 30% over the same period.
"Looking forward, there is little reason to expect a strong recovery in living standards over the next few years, the report said.""
http://www.bbc.co.uk/news/business-25966075
Drop in real wages longest for 50 years, says ONS
"It also said that wages were still falling in the third quarter of 2013 - the latest figures available for all measures - with a drop of 1.5% compared with the same period a year earlier.
"[This makes] it difficult to conclude that there has yet been a break from the trend of falling real wage growth," it said."
http://www.bbc.co.uk/news/business-25977678
Wage inflation is seen as one of the ways to get us out of this fragmented recovery.
Where is this wage inflation going to come from?
It is unlikely to be the public sector. On the supply side we still have large numbers of unemployed, particularly amongst the young.We have a large number of economically in active or sub active. We have the elderly desperate for work to bridge the pension gap. We have open door immigration. We have surplus graduates with debt to repay.
Increases in NMW will reduce benefits of many.
I don't dispute there will always be key demand areas for a few.
"Average UK living standards have fallen "dramatically" since the recession and will not reach pre-crisis levels by the next election, economists have said.
The Institute for Fiscal Studies (IFS) calculated that a mid-range household's income between 2013 and 2014 was 6% below its pre-crisis peak.
This was felt equally across high and low income groups when the cost of living was taken into account.
But those on low incomes could feel the squeeze more in the coming years.
This was the result of further cuts to benefits and tax credits, the IFS said.
The findings will further fuel the political debate about the UK's economic recovery and whether this will benefit all groups of society equally. The IFS suggested that, so far, this debate had suffered from a lack of up-to-date information."
"However, the IFS said that those with relatively high incomes had benefitted from cheaper mortgage rates.
In contrast, rising food and energy prices, which formed a bigger proportion of the spending of poorer households, had risen faster than the average cost of living measured by inflation.
The report said that inflation between 2008 and 2013 was 20%, while energy prices rose by 60% and food prices were up by 30% over the same period.
"Looking forward, there is little reason to expect a strong recovery in living standards over the next few years, the report said.""
http://www.bbc.co.uk/news/business-25966075
Drop in real wages longest for 50 years, says ONS
"It also said that wages were still falling in the third quarter of 2013 - the latest figures available for all measures - with a drop of 1.5% compared with the same period a year earlier.
"[This makes] it difficult to conclude that there has yet been a break from the trend of falling real wage growth," it said."
http://www.bbc.co.uk/news/business-25977678
Wage inflation is seen as one of the ways to get us out of this fragmented recovery.
Where is this wage inflation going to come from?
It is unlikely to be the public sector. On the supply side we still have large numbers of unemployed, particularly amongst the young.We have a large number of economically in active or sub active. We have the elderly desperate for work to bridge the pension gap. We have open door immigration. We have surplus graduates with debt to repay.
Increases in NMW will reduce benefits of many.
I don't dispute there will always be key demand areas for a few.
"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
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Comments
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If we work on the basis that supply and demand in labour markets set wages, just at they set most prices, with the caveat that the minimum wages sets a price floor which means supply at low prices is kept artificially high then as GDP grows we would expect demand to increase and prices (wages) to increase with it.
The large unemployment among the young will only keep wages down amongst the unskilled minority: you can't employ a teenager as a lawyer or a sous Chef or a shop manager or a proper hairdresser as those jobs require experience.
If the recovery continues then one of the themes of the next 18 months will be rising wages.0 -
The longest series of falls since 1964.
Should provide some welcome news to the young starting out in the world of work today. The boomers were also starting work facing real terms pay decreases and they're the richest generation in world history.0 -
If we work on the basis that supply and demand in labour markets set wages, just at they set most prices, with the caveat that the minimum wages sets a price floor which means supply at low prices is kept artificially high then as GDP grows we would expect demand to increase and prices (wages) to increase with it.
The large unemployment among the young will only keep wages down amongst the unskilled minority: you can't employ a teenager as a lawyer or a sous Chef or a shop manager or a proper hairdresser as those jobs require experience.
If the recovery continues then one of the themes of the next 18 months will be rising wages.
Question is will wage rises be sufficient to outstrip necessary commodity prices, at the lower end of the scale, and to lift demand.
I appreciate what should occur will it happen broadly and to such an extent to actually take us forward.
People will always be brought through the training line what confidence is their that over supply of capable qualified resources won't suppress any tendency to increase rates while people develop."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Hardly a surprise. Given the low pay increases or indeed cuts that many people have endured in recent years.
The boom years appear even more a mirage of credit fueled growth.0 -
Have real wages fallen by more or less than the amount by which govt has reduced its borrowing on behalf of each of us?I think....0
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Thrugelmir wrote: »Hardly a surprise. Given the low pay increases or indeed cuts that many people have endured in recent years.
The boom years appear even more a mirage of credit fueled growth.
And of course it's good to see confirmation that the income rises have been greatest amongst the highest paid. It may stop people peddling the lie that teh better off have not borne their share of the reduction.0 -
If we work on the basis that supply and demand in labour markets set wages, just at they set most prices, with the caveat that the minimum wages sets a price floor which means supply at low prices is kept artificially high then as GDP grows we would expect demand to increase and prices (wages) to increase with it.
The large unemployment among the young will only keep wages down amongst the unskilled minority: you can't employ a teenager as a lawyer or a sous Chef or a shop manager or a proper hairdresser as those jobs require experience.
If the recovery continues then one of the themes of the next 18 months will be rising wages.
True, but labours share of GDP has been falling for 50 years.
In 1958 wages accounted for 50% of GDP in the USA, now it is 42%.
The decline really started in the early 1980's and happened in all countries.
Turkey, Mexico, France, Germany, Italy and Japan have all seen larger falls in labour’s share of the pie than the US or UK (so much for continental criticisms of 'anglo-saxon' capitalism.
The obvious illustration of this is the vast increase in demand for luxury goods (or properties in London for example), or the accumulation of vast cash piles by companies (Apple).
A return to the gilded age perhaps.US housing: it's not a bubble - Moneyweek Dec 12, 20050 -
Kennyboy66 wrote: »True, but labours share of GDP has been falling for 50 years.
In 1958 wages accounted for 50% of GDP in the USA, now it is 42%.
The decline really started in the early 1980's and happened in all countries.
Turkey, Mexico, France, Germany, Italy and Japan have all seen larger falls in labour’s share of the pie than the US or UK (so much for continental criticisms of 'anglo-saxon' capitalism.
The obvious illustration of this is the vast increase in demand for luxury goods (or properties in London for example), or the accumulation of vast cash piles by companies (Apple).
A return to the gilded age perhaps.
Yes, the share of GDP going to labour has fallen just as the share of GDP going to the Government has risen.
It's a myth AIUI that people are earning less, unless you look in a very selective period, it's more that governments are taking more.0 -
Yes, the share of GDP going to labour has fallen just as the share of GDP going to the Government has risen.
It's a myth AIUI that people are earning less, unless you look in a very selective period, it's more that governments are taking more.
Has ths share going to the government really risen? Seems to occupy a limited range ~ 35/36%
http://www.oecd-ilibrary.org/taxation/total-tax-revenue_20758510-table2"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0
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