[Omah]

http://www.bbc.co.uk/news/business-22860320

Wages have fallen more in real terms during the current economic downturn than ever before, according to a report.

One 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.

This may explain why unemployment has not been higher, she added.

Economists have puzzled over the fact that, since the recession began in 2008, the UK has seen the longest and deepest loss of output in a century - and yet employment has dropped by much less than in previous recessions.

The conundrum is known as the "productivity puzzle".

"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.

"This means that workers may be experiencing greater competition for jobs and hence may be more willing to accept lower wages than before."

The IFS analysis looked at salaries in real terms - which takes the inflation rate into account.

It showed that many UK companies, particularly smaller businesses, have cut wages rather than lay off staff. Larger companies tended to reduce their workforce more but maintain wages.

"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," Ms Crawford said.

On Tuesday the TUC said that total pay in some parts of the UK has shrunk by more than 10% since the start of the downturn in 2007. It said that north-west and south-west England had seen the sharpest cuts - 10.6% and 10.1% respectively.

Now, that is a new modern economic phenomenon .....

[Kizzy]

A glut of workers is driving wages down..... How many economists did it take to work that one out?

[fruit_cake]

I wonder what the figures are for the wealthy, have they seen a drop in wages? I suspect not, but I'd like to know the answer to that one.

[Kizzy]

How can wages be held down in this way?
If families are not making enough money then they invariably have to lean more on the state? Low income families will also be out of the tax bracket too... It's a lose lose situation.
So why are the government not leaning on companies to pay a living wage?

[arista]

Originally Posted by fruit_cake

I wonder what the figures are for the wealthy, have they seen a drop in wages? I suspect not, but I'd like to know the answer to that one.

Yes the Wealthy have had Cut backs
and sackings in the City,
I know one man who did not like it (he was a fool to speak )
and they replaced him
and moved him to office mail.
He then left.

Everyone can be replaced now
as there are so many not in work.


Times Are Hard all over the place.

Even in China.

[joeysteele]

The report in the OP is a very hard hitting one and also another thing going on is the following.
I have a friend who works for a company who have changed the the contracts which are,(being fair to the comapny),re-assessed every 3 years.
Now from her past guaranteed working hours of 38 weekly,her new 'guaranteed hours are 35 weekly.
The other 3 hours are now what they call 'discretionary' hours as to the company's needs in the future.

It means on odd occasions my friend will have to work 38 hours when it suits the company, however in fact, she will for the greater part of each year be losing 3 hours wages every week from what she was on up until now.
In effect a wage cut and loss of income.

I would dare bet this is being done in likely lots of places too. So although workers are still in jobs, they are in fact being made worse off.
When the Govt crows at any small fall in unemployment they never counter balance that with things like this happening or the rise as to only part time vacancies too.