UK Government figures show wage-earners have taken a £5,000 pay cut in the past five years fueling debates before the general election about whether the government has done enough to protect workers.
The figures published in a report by the Office for National Statistics show wages and salaries for the middle fifth of non-retired households fell from £33,100 in 2007-08 to £28,300 in 2011-12.
“While GDP per person continued to grow at similar rates between 2004-5 and 2007-8, growth of median household income slowed to a fifth of its previous rate in the years immediately before the start of the economic downturn,” the report said.
The figures also show that despite the big rise in personal allowances due to budget decisions by the Liberal Democrats and the Conservatives, median household income for the overall population has fallen by 3.8%, after adjusting for inflation, in the period.
The report confirms the extent to which the welfare reforms by the Treasury have hit middle incomes. The retired median household income in the UK is much lower in absolute terms than non-retired income.
The Resolution Foundation, a think-tank that specializes in this policy field, said “The figures also reveal a dramatic generational difference – with the incomes of working-age households falling by more than 6% since 2008 while those of retired households have continued to rise. The pre-crisis slowdown is likely to have been even starker if we looked only at working-age households.”