Pay squeeze leaves average worker ‘£10,400 a year worse off’

A national pay squeeze is leaving Britain’s workers £10,400 worse off a year, according to a new report.

Employees are facing the longest sustained pressure on pay in 200 years, with real wages still lower than they were in 2008 for over half the country.

Average pay in 212 out of 340 local authorities trails behind post-financial crash levels, but the Trades Union Congress (TUC) union said wage performance in “every corner of Britain” was “well below” historic trends.

Before the financial crash, real weekly wages grew on average by 1.7pc each year according to the union body. But since 2008, the union organisation said average annual growth is down 0.2pc.

TUC estimates that the average UK worker would be £10,400 a year better off if real wages had grown at their pre-crisis trend – the equivalent of £200 a week.

Paul Nowak, TUC’s general secretary, said: “The Tories’ failure to grow the economy – and their scorched-earth austerity policies – has decimated family budgets.

“Just imagine how much better off people would be if they had an extra £10,400 in their pay packets each year – and how much more prosperous the country would be.”

The International Monetary Fund (IMF) has already said the UK is at risk of becoming trapped in a prolonged period of weak growth and stubborn inflation, warning of “zero growth” this year.

London is currently home to the highest share of real wage blackspots, with real pay lower than in 2008 across 94pc of the city.

But even in the North East, a traditionally lower-paid region, pay in half of local authorities is still lagging behind levels from 16 years ago.

The TUC, which represents 48 unions, said its report was a “damning indictment” of the Conservatives’ economic record.

Official figures also show that the number of workforce dropouts claiming long-term sickness has surged to a record high.

Meanwhile, the time it takes to save for a mortgage deposit is getting longer – and for a growing proportion of Britons, buying is not even an option anymore.

In 2012, it took renters 6.8 years on average to save for a deposit for a mortgage. Now, this figure is more like 9.6 years according to campaign group Generation Rent.

Richard Donnell, research director at software firm Houseful, said as a result “tens of people” are chasing every rented home that comes onto the market.

He added: “There is a lot of competition and those on lower incomes may struggle to compete or afford rented homes.

“This will push people who are most affordability constrained to look further afield which may mean they can rent, but they will have longer commutes and other social costs. It’s why we need to grow affordable housing in all its forms.”

Marco Forgione, the Director General at The Institute of Export & International Trade, said the report “makes sobering reading” and is driving a nationwide skills gap. Evidence from his institute shows that businesses that trade internationally are more sustainable, more resilient, employ more people, as well as being more innovative and more profitable.

“If we are to tackle some of our most important societal and economic challenges, we have to get more regionally based businesses trading internationally and creating high value careers.

“Talking with businesses across our nations and regions we hear repeatedly that in recent years there’s been an exodus of skilled workers from the UK. All of this contributes to the UK’s ongoing productivity gap.”