From education to employment

UK workers miss out on £4,000 in pay growth compared to OECD average since 2007

TUC General Secretary Frances O’Grady

New @the_TUC analysis published today (Saturday) shows the exceptional nature of the UK’s pay squeeze.

  • Average wage in UK would be £76 per week higher if growth had kept pace with the OECD average since the financial crisis
  • Britain’s exceptional pay squeeze and cost of living crisis is due to failures of Conservative government rather than just global events, says TUC

While most OECD countries have delivered significant pay growth to their workers since the financial crisis, real wages in the UK have fallen.

Average annual pay growth in the UK has been -0.2% since 2007, and it is one of just 7 out of 33 OECD countries where real pay growth since 2007 is negative.

The TUC says that UK workers should not assume that, because the rest of the world was hit by the financial crisis and other global problems, other countries have suffered the same pay stagnation too.

In fact, if the UK had kept pace with the OECD average since 2007, the typical UK worker’s pay packet would be worth £4,000 more today. But instead, the average real wage has fallen by £950 since 2007 due to an average annual growth rate of -0.2%.

The highest rates of annual real pay growth since 2007 have been in the Baltic states Lithuania (3.2%), Latvia (2.8%), and Estonia (2.5%), followed by Poland (2.5%) and Slovakia (2.0%).

Countries comparable to the UK in location and industrial development tend to have done much better too – for example Sweden (1.6%), Norway (1.1%), Germany (1.0%), Denmark (0.9%) and France (0.5%).

Even some of the countries that were hardest hit by the financial crisis have done better than the UK – for example, Ireland (0.7%), Iceland (0.5%) and Portugal (0.4%).

The TUC says that the UK’s exceptionally poor pay growth is a consequence of the austerity policies pursued by the last twelve years of Conservative governments, public sector pay freezes, and attacks on trade unions, including the Trade Union Act 2016.

Actions needed on wages and living standards in the spring statement

The UK is languishing in 29th place out of 33 OECD nations due to wages falling with an average annual growth rate of -0.2% since 2007.

This weak pay growth has left working families vulnerable in the face of soaring energy prices. TUC research has shown that energy prices are set to rise 14 times faster than wages this year.

To get wages rising and help families with the soaring cost of living, the TUC spring statement submission to the Treasury includes calls for the chancellor to:

  • Strengthen collective bargaining as the most sustainable way to boost pay, using the long-promised employment bill to give working people and their trade unions new powers to negotiate fair pay agreements across industrial sectors.
  • Boost the minimum wage immediately to at least £10 an hour, for all workers irrespective of age.
  • Fund decent pay rises for all public service workers to at least match the cost of living and begins to restore earnings lost over the last decade.
  • Improve support for families facing rising energy costs, with an immediate boost to Universal Credit, a grant not a loan (replacing the energy price rebate), an increase in the warm homes discount, and funding for a home retrofit programme delivered by local councils. 
  • A windfall tax on North Sea oil and gas companies’ profits, with revenue used to fund measures to help families facing rising energy costs.

TUC General Secretary Frances O’Grady said:

“Everyone who works for a living ought to earn enough to get by.

“Over the last decade, workers in most of the world got a pay rise. But here in the UK, wages are now worth less than they were before the financial crisis.

“This was a choice. Over the last twelve years, Conservative ministers chose to impose austerity, cut public sector pay, and attack workers’ rights to bargain for fair pay through their trade unions.

“And now these years of weak pay growth have left millions of working families badly exposed to soaring bills and prices. Everything’s going up – but wages.

“Britain needs a pay rise. The chancellor must put higher wages at the heart of his spring statement. And ministers must get unions and employers around the table to negotiate binding fair pay agreements in every sector of the economy, to get wages rising.”

TUC analysis comparing wages and energy costs: A week ago the TUC published analysis showing that Energy bills set to rise at least 14 times faster than wages in 2022.

The full TUC spring statement submission includes policy calls to boost pay, support humanitarian assistance and conflict resolution in Ukraine, support families with rising energy bills and other essential costs, and to build a high-wage, high skill, high productivity economy.

Data on pay from 2007 to 2021 for OECD countries

RankCountryAverage annual real pay change 2007-2021 %RankCountryAverage annual real pay change 2007-2021 %
5Slovak Republic2.021Luxembourg0.4
8Czech Republic1.424Portugal0.4
13Korea1.029United Kingdom-0.2
15United States0.931Italy-0.4
 OECD average0.832Mexico-0.8
Average annual change to real pay for OECD countries from 2007 to 2021

The TUC analysis presented in the table above and used in this release is based on OECD data for annual pay. Outturn figures were used for 2007-2020, and the latest Economic Outlook projection for 2021. Figures are adjusted for prices using internationally comparable CPI figures.

The source data for this analysis can be found in:

Real wage squeeze is creating “perfect cost-of-living storm”

15th Feb 2022: Today’s labour market figures show real wages fell by 1.2 per cent in the year to December – the largest fall in the value of earnings in eight years.

The unemployment rate for BME workers is still more than twice as bad as the rate for white workers, and the number of people on  zero-hours contracts hits 1 million.

The latest employment figures published by the ONS today (Tuesday), show that real wages fell by 1.2 per cent in the year to December (the largest fall on the single-month measure in 8 years).

The Bank of England forecasts that real wages will fall by £50 a month, on average, in 2022.

Working families need financial security. But they face a perfect cost-of-living storm.

Pay packets are plummeting in value as bills and prices sky-rocket. 

This huge pressure on household budgets will only get worse unless the government takes proper action.

That means working with unions and employers to get pay rising across the economy.

After the longest wage squeeze in more than 200 years, Britain urgently needs a pay rise.

BME unemployment figures

The figures today show that Black and minority ethnic (BME) unemployment rates are still more than twice as bad as the rates for white workers.

Covid-19 has shone a spotlight on the racism BME workers face in the labour market. Today’s figures show that BME workers are more than twice as likely as white workers to be unemployed.

Ministers must challenge the discrimination that holds BME workers back. Banning zero-hours contracts and introducing mandatory ethnicity pay gap reporting would be a good start.

Zero-hours contracts

Figures also published today show that over 1 million workers are now on zero-hours contracts – a rise of 40,000 over the year.

Everyone deserves to be treated with dignity and respect at work. But over a million people are still having to rely on zero-hours contracts to make ends meet.

Many are key workers – in sectors like social care. Their reward for helping to get Britain through the pandemic is low pay and insecure terms and conditions.  

The time for excuses is over. The government must publish its long overdue employment bill and ban exploitative practices – like zero-hours contracts – once and for all.

Frances O’Grady, General Secretary, TUC

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