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Real wages to shrink £1,750 over next two years
UK workers are set for the worst wage squeeze in modern history and will face the tightest contraction in pay of any G7 economy, analysis reveals.
Real wages in the UK are forecast to shrink by 6.2% (£1,750) over the next two years. This is steeper than any other G7 nation, Trades Union Congress (TUC) analysis of OECD figures revealed.
It said the comparison of international pay trends also shows how real wage growth will bounce back much faster in other nations.
As an example, Italy – the second worst hit economy – will see real wages fall 3.2% this year, but will then be down just 0.7% in 2023.
Meanwhile UK wages are forecast to fall by 3% next year while France and the United States are forecast for 0.5% and 0.6% wage growth between 2022 and 2023, respectively.
As such, the TUC said UK workers are suffering the longest and harshest pay squeeze in modern history.
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It comes as its previous analysis revealed the average worker has lost nearly £20,000 in real earnings between 2008 and 2021 as a result of pay not keeping up with inflation.
Further, it’s been over a decade since the financial crisis, but workers are still earning £75 a month less in real terms than in 2008.
It is calling for a significant rise in the national minimum wage, a real-terms pay rise for public sector workers to help restore earnings lost over the last decade and for Universal Credit to be raised to 80% of the real Living Wage.
‘Bottom of the league for pay growth’
Outgoing TUC general secretary, Frances O’Grady, said the top priority for the next Prime Minister should be to get wages rising across the economy.
She said: “Making ends meet shouldn’t be a battle. But UK workers are suffering the worst pay squeeze in the G7 and the longest in modern history.
“Years of standstill wages have left households brutally exposed to this cost-of-living crisis.
“The number one priority for Tory leadership candidates should be to get pay rising across the economy.
“This is the best way to give people long-term financial security and to stop families from lurching from crisis to crisis.”