Why it does not add up anymore

The Office of National Statistics today reported that the level of earnings had retreated to 2003 levels with 7% of people have had pay rises above their living costs since coalition


From 2010 to 2012, the decline in median real earnings averaged 2.1% per year for full-time male public sector workers in the UK compared with 3.1% per year for their private sector counterparts.


The self-employed were the worst hit of all, with a 16% drop in median real income between 2007/08 and 2010/11 for the UK

Official figures now confirm what everyone knows. Living standards have been falling for the vast majority, and there is no sign of change.


With unemployment figures being kept down by part time labour or by self employed this explains why jobseekers has not grown nor has the economy.

But on top of the wage squeeze, the government has been making it worse with cuts to tax credits, the freeze in child benefit and a VAT hike. Millions of low-income families - both in and out of work - are now threatened by the bedroom tax and the one per cent cap on benefits and the changes to council tax benefit, where everyone of working age will make a contribution. The cost of living goes ever upwards with the costs of essentials such as food, fuel, energy and rented accommodation continuing to increase.

There is a sharp contrast with the few at the top of the corporate ladder, where bonuses and huge salaries allow them to enjoy more than their fair share of the created wealth. They are now looking forward to the top-pay tax cut due in April.

With this wage disparity, with the many having pay freezes and the few milking the system, this will continue to have an impact on the wider economy.

The economy will not recover until people have money in their pockets to spend, and businesses can know that their customers feel confident. The challenge for the government is to reverse austerity and start boosting wages and incomes for the majority. That is the only route to growth.

Matthew Whittaker of the Resolution Foundation says "We now know that the squeeze on living standards will be longer and deeper than projected this time last year. Average wages are not expected to rise in real terms until late 2014 after a period of stagnation and decline. Despite stronger than expected job growth in the private sector, many people continue to work fewer hours than they would like, putting downward pressure on household incomes."

The unite union says "The challenge is how we ensure that the benefits of future growth are fairly shared."

"In the absence of wage rises, consumers must borrow to buy goods and services. If they don't borrow, they don't shop and if they don't shop, producers of goods and services shed jobs."


"Britain isn't just being squeezed, our country is going backwards under the Tory-led coalition. The nation is now characterised by falling wages, insecure employment and cuts to welfare.

Ed Balls the Shadow Chancellor says .“We have a chancellor who believes that he can slash public spending, raise VAT and cut benefits – he can take billions out of the economy and billions more out of people’s pockets, he can directly cut thousands of public sector jobs and private sector contracts, and none of this will have any impact on unemployment or growth.
Against all the evidence, both contemporary and historical, he argues the private sector will somehow rush to fill the void left by government and consumer spending, and become the driver of jobs and growth”

The Bank of England says today that Inflation will be running higher than wages this year.

The challenge for politicians is how to create increases in incomes, until the coalition invests in the infastructure, develop an industrial strategy, develop skills, investing in sciences and research and development, this country will be cut away from prosperity and human misery will grow.