This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-22860320

The article has changed 7 times. There is an RSS feed of changes available.

Version 4 Version 5
Recession prompted 'unprecedented' fall in wages Recession prompted 'unprecedented' fall in wages
(35 minutes later)
Wages have fallen more in real terms in the current economic downturn than ever before, according to a report.Wages have fallen more in real terms in the current economic downturn than ever before, according to a report.
On top of the rising cost of living, a third of workers who stayed in the same job saw a wage cut or freeze between 2010 and 2011, said the Institute for Fiscal Studies (IFS).On top of the rising cost of living, a third of workers who stayed in the same job saw a wage cut or freeze between 2010 and 2011, said the Institute for Fiscal Studies (IFS).
"The falls in nominal wages... during this recession are unprecedented," said Claire Crawford from the IFS."The falls in nominal wages... during this recession are unprecedented," said Claire Crawford from the IFS.
Labour said the figures showed there was a "living-standards crisis".Labour said the figures showed there was a "living-standards crisis".
The think tank found the pay gap between public- and private-sector workers has "increased substantially" in the past four years.The think tank found the pay gap between public- and private-sector workers has "increased substantially" in the past four years.
"Despite widespread discussion and acknowledgement of public sector pay restraint… average real hourly wages have actually fallen faster in the private sector than in the public sector over the last few years," it said. It said "average real hourly wages" had fallen faster in the private sector than the public sector over the last few years.
In 2009, the average public-sector worker earned about £16.60 per hour, which dropped to about £15.80 in 2011, the IFS said. Meanwhile, hourly pay for private-sector workers in 2009 was just over £15.10 and dropped to about £13.60 in 2011.In 2009, the average public-sector worker earned about £16.60 per hour, which dropped to about £15.80 in 2011, the IFS said. Meanwhile, hourly pay for private-sector workers in 2009 was just over £15.10 and dropped to about £13.60 in 2011.
'Not good enough''Not good enough'
At Prime Minister's Questions, Labour leader Ed Miliband said the figures showed "people's wages have fallen on average by over £1,300 a year" since the coalition came to power.At Prime Minister's Questions, Labour leader Ed Miliband said the figures showed "people's wages have fallen on average by over £1,300 a year" since the coalition came to power.
He accused David Cameron of ignoring the "living-standards crisis that is facing families up and down the country".He accused David Cameron of ignoring the "living-standards crisis that is facing families up and down the country".
"He's into his fourth year as prime minister, and his excuse for falling living standards is: 'Don't blame me - I'm only the prime minister.' It's simply not good enough.""He's into his fourth year as prime minister, and his excuse for falling living standards is: 'Don't blame me - I'm only the prime minister.' It's simply not good enough."
The PM conceded "living standards are under pressure", but said a freeze in council tax and cuts to income tax would help to alleviate the problem. The PM conceded "living standards are under pressure", but said a freeze in council tax and income tax cuts would help alleviate the problem.
"Over the last year, while we've lost 100,000 [jobs] in the public sector, we've gained five times that amount in private-sector employment," Mr Cameron said."Over the last year, while we've lost 100,000 [jobs] in the public sector, we've gained five times that amount in private-sector employment," Mr Cameron said.
The IFS report comes a day after analysis by union organisation the TUC found pay in some parts of the UK had shrunk by more than 10% since the start of the downturn in 2007. The IFS report comes a day after union organisation the TUC found pay in some parts of the UK had shrunk by more than 10% since the start of the downturn in 2007.
The TUC blamed the cuts on wages not keeping pace with inflation and changes in hours and employment, such as more part-time working, but business leaders said pay restraint had been crucial in protecting jobs during tough economic times.
'Productivity puzzle''Productivity puzzle'
The IFS analysis looked at salaries in real terms, which takes the inflation rate into account.The IFS analysis looked at salaries in real terms, which takes the inflation rate into account.
It showed many UK companies, particularly smaller businesses, have cut wages rather than lay off staff. Larger companies tended to reduce their workforce but maintain wages.It showed many UK companies, particularly smaller businesses, have cut wages rather than lay off staff. Larger companies tended to reduce their workforce but maintain wages.
IFS experts said this could provide an explanation for a fall in UK output while employment has held up. IFS experts said this could explain the so-called 'productivity puzzle" where there is a fall in UK output while employment has held up.
"Lone parents and older workers, for example, are not withdrawing from the labour market as they have in previous recessions, which may in part be driven by changes to the welfare system," the report said. It said lone parents and older workers were not withdrawing from the labour market, which may in part be due to changes to the welfare system.
"This means that workers may be experiencing greater competition for jobs and hence may be more willing to accept lower wages than before.""This means that workers may be experiencing greater competition for jobs and hence may be more willing to accept lower wages than before."
Ms Crawford said: "The falls in nominal wages that workers have experienced during this recession are unprecedented, and seem to provide at least a partial explanation for why unemployment has risen less, and productivity has fallen more, than might otherwise have been expected. Ms Crawford said: "The falls in nominal wages that workers have experienced during this recession are unprecedented, and seem to provide at least a partial explanation for why unemployment has risen less, and productivity has fallen more, than might otherwise have been expected."
"To the extent that it is better for individuals to stay in work, albeit with lower wages, than to become unemployed, the long-term consequences of this recession in terms of labour market performance may be less severe than following the high unemployment recessions of the 1980s and 1990s."
'Less unionised''Less unionised'
In addition, the IFS said fewer workers are unionised or covered by collective wage agreements and they tended to see smaller wage increases. The IFS said fewer workers are unionised or covered by collective wage agreements and tended to see smaller wage increases.
It also found inequality has fallen - in contrast to the 1980s recession and its aftermath - and that older workers have been much less affected than younger generations. It also found inequality has fallen - in contrast to the 1980s recession and its aftermath - and older workers have been less affected than younger generations.
A spokesman for the Confederation of British Industry (CBI) said: "We've been saying for a long-time that pay restraint has been protecting jobs - as people price themselves into jobs unlike in previous deep recessions, along with more flexible labour market practices like part-time work and reduced-hours contracts. A spokesman for the Confederation of British Industry (CBI) said it had long said that pay restraint had protected jobs.
"The risk is that average wage growth could be so slow, that the national minimum wage might start to outstrip it in certain sectors - so the Low Pay Commission has to keep an eye on it before the new rates kick in later this year.""The risk is that average wage growth could be so slow, that the national minimum wage might start to outstrip it in certain sectors - so the Low Pay Commission has to keep an eye on it before the new rates kick in later this year."
Tim Jones, a college lecturer in Dorset, told the BBC he has had his hours increased and salary frozen since 2009. Tim Jones, a college lecturer in Dorset, told the BBC his hours had increased and his salary had been frozen since 2009.
"We have been forced to effectively work for less pay per hour than we were earning 10 years ago," he said."We have been forced to effectively work for less pay per hour than we were earning 10 years ago," he said.
James Clark, from Godalming, had a wage freeze between 2008 and 2011.James Clark, from Godalming, had a wage freeze between 2008 and 2011.
"I just couldn't keep up with my basic costs, such as season ticket, utilities, weekly food shop, mortgage," he told the BBC."I just couldn't keep up with my basic costs, such as season ticket, utilities, weekly food shop, mortgage," he told the BBC.
A Treasury spokesman said the labour market had remained strong, even though the UK was recovering from "the longest and deepest" recession in a century.A Treasury spokesman said the labour market had remained strong, even though the UK was recovering from "the longest and deepest" recession in a century.
"The government understands the pressures that households face with the cost of living and has taken action to help including increasing the personal allowance, taking 2.7 million people out of income tax altogether and saving a typical taxpayer over £700, and freezing fuel duty for nearly three-and-a-half years," he said."The government understands the pressures that households face with the cost of living and has taken action to help including increasing the personal allowance, taking 2.7 million people out of income tax altogether and saving a typical taxpayer over £700, and freezing fuel duty for nearly three-and-a-half years," he said.
Figures released on Wednesday showed UK unemployment has fallen by 5,000.Figures released on Wednesday showed UK unemployment has fallen by 5,000.
Office for National Statistics (ONS) data indicated 2.51 million people were out of work in the three months to April. The jobless rate was unchanged from three months earlier, at 7.8%.Office for National Statistics (ONS) data indicated 2.51 million people were out of work in the three months to April. The jobless rate was unchanged from three months earlier, at 7.8%.
Average earnings in the period were 1.3% up on a year earlier, thanks to a sharp rise in April bonus payments.