Reality Check: What's been going on with pay?

Reality Check: What's been going on with pay?

The claim: Workers' living standards have been falling far too fast for far too long.

Reality Check verdict: Average pay adjusted for prices has been rising for the past couple of years, but is still below the level it was 10 years ago, before the financial crisis.

Frances O'Grady, general secretary of trade union umbrella body the TUC, has been talking about pay on the BBC News Channel.

"I think all major parties need to wake up to the fact that workers' living standards… have been falling far too fast for too long," she said.

The usual measure of whether living standards are falling is whether pay is rising faster than prices.


This chart adjusts average pay for changes in inflation, measured by the consumer price index (CPI), to give real average earnings.


Click to see content: Real_awe

It's been a tough 10 years for pay.

Real average earnings have still not returned to the level they were at before the financial crisis.

If prices are rising faster than wages then people's spending power falls.

In the last few years, low levels of inflation have meant that pay rises have on average outstripped price rises.

But inflation has now been boosted, partly by the rising price of imports caused by the falling value of the pound since the EU referendum was called.

You can see from this chart that average prices and pay are currently running at about the same rate.


Click to see content: Inflation_earnings

While real wages are still below their pre-financial crisis levels, they have been rising since the autumn of 2014, although that appears to have stalled now.

But all of these figures are based on averages, which do not help with the experiences of different areas and sectors of the country.

Many workers in the public sector have had pay increases capped at 1%, which has generally been below the rate of inflation.


Click to see content: Public_v_private

Levels of pay vary considerably throughout the country, with average earnings on the whole higher in the south-east of England than in most of the rest of the country.

Average pay has also grown faster for people who have been in jobs for more than a year, which some people have interpreted as meaning that it is new jobs being created that are dragging down average pay.

However, it may also be argued that it just shows more stable jobs tend to be better paid.

Bank of England governor Mark Carney warned last week that "wages won't keep up with prices" this year, meaning "a more challenging time for British households".

The latest figures for inflation will be released on Tuesday, with average earnings being updated as part of the labour market figures on Wednesday.



Add Comment

all comments

  Other news

more
General election 2017: Lib Dems warn over crime database access

General election 2017: Lib Dems warn over crime database access..

28-May, 19:35

The UK could be "cut off" from an EU-wide crime and security database...

Concrete for taller wind turbine towers passes tests, could help expand wind energy nationwide

Concrete for taller wind turbine towers passes tests, could help expand wind energy nationwide..

28-May, 21:12

That's wind country. The blue band runs east from the Rockies to just...

Are Prince Harry and Meghan Markle moving in together? Royal is 'looking for a relaxed country house' amid reports he is planning to pop the question to Suits actress

Are Prince Harry and Meghan Markle moving in together? Royal is 'looking for a relaxed country..

28-May, 08:04

But it seems the pair are already set to take their relationship to the...

Miranda Kerr marries Snapchat founder Evan Spiegel - all the details!

Miranda Kerr marries Snapchat founder Evan Spiegel - all the details!..

28-May, 09:12

The model and businessman wed in an intimate ceremony, according to...

Japan and Russia hold talks on security, territorial dispute

Japan and Russia hold talks on security, territorial dispute..

19-Mar, 21:46

The foreign and defense ministers from Japan and Russia are meeting in...

Syrian warplanes pound rebel-held area in central city

Syrian warplanes pound rebel-held area in central city..

26-Feb, 07:57

Syrian opposition activists say government warplanes are pounding a...

Activist: 3 detained in Bahrain over UK horse show protests

Activist: 3 detained in Bahrain over UK horse show protests..

13-May, 09:01

Bahrain detained three activists over protests targeting the tiny island...

Montenegrin prosecutor summons opposition leaders over coup

Montenegrin prosecutor summons opposition leaders over coup..

17-Feb, 08:26

Two prominent opposition leaders in Montenegro say they will be...