Real wages in the UK have suffered a drop of nearly 8% over the last six years.
The average person in work is now some £2,000 worse off since the financial crisis hit, according to the National Institute of Economic and Social Research (NIESR) which called the fall “unprecedented”.
“The scale of the real wage falls is historically unprecedented, certainly in the past 50 years where broadly comparable records exist,” said the authors of the report.
It is this squeeze which has put great pressure on households to meet expenses.
The research revealed that young workers suffered the biggest hit over the period, with pay falling by 14% between 2008 and 2013.
“For workers aged between 18 and 25, the fall in real wages in the recent period has been so extreme that, in real terms, wages are back to levels not seen since 1998,” the authors said.
The research also found that the fall in real wages was exacerbated by nominal wage cuts, as well as the impact of inflation.
The authors anticipated that wages could begin to grow now that the economy appears to be improving, but there would be no meaningful increases until the end of this year, with the biggest effects felt only in 2016.
