UK incomes fall 3.5% in real terms, ONS reveals

Big fall in salaries for average workers and sizeable rises for senior managers, says annual households earning survey


James Ball
guardian.co.uk, Wednesday 23 November 2011 11.27 GMT


The average pay and earnings of UK households has fallen 3.5% for 2010 when inflation of at least 5% is taken into account, says the ONS Photograph: Rosemary Roberts/Alamy/Alamy

UK households are facing pay cuts in real terms of more than 3.5% as salary increases fail to keep pace with inflation, official figures reveal.

The median salary for a full-time worker in the UK rose 1.4% in 2011 to £26,244, against a headline CPI inflation rate of 5% or higher, according to the Annual Survey of Hours and Earnings from the Office for National Statistics.

Overall earnings growth was even lower, with the average UK salary increasing just 0.5% on 2010 levels once part-time workers are included.

This was driven by a shift to part-time work as a result of high unemployment and low economic growth: the indicative figures for 2011 included 380,000 fewer full-time workers than a year before, with 72,000 more part-time employees.

Progress in closing the gender pay gap has also slowed, with women in full-time employment earning on average £5,409 less than men – the gap narrowed by £179 in 2010 compared with £558 in 2009.

At such a rate, it would take until 2041 for the earnings of women working full-time to match those of men.

The headline figures also masked sizeable falls in pay for some of the UK's lowest-earning professions – and sizeable salary boosts for senior managers and directors.

Workers in "elementary occupations", a classification including labourers, farm workers, postal workers and others, saw their typical pay fall 0.9% against its 2010 level, while professional pay rose 1% and managerial salaries rose 0.5%.

Directors and chief executives of leading organisations enjoyed the most sizeable pay rises, with median earnings up 15% to £112,157, in part a result of trends shifting earnings to basic pay and away from bonuses.

Salaries of senior corporate managers also increased substantially – up 7.1% year-on-year to £77,679.

By contrast, the annual pay of waiters and waitresses (mostly part-time workers) fell 11.2% year-on-year to £5,660 – the most substantial drop of any group of workers. Cleaning staff earnings fell 3.4%.

The TUC general secretary, Brendan Barber, said the latest figures showed the UK's sluggish economic growth was due to a squeeze on wages rather than the wider economic crises.

"Today's figures confirm that 2011 has been a year of wage stagnation, with pay rises far outstripped by inflation, and low-paid employees being squeezed particularly hard," he said

"Falling wages and self-defeating austerity have been the main reasons for the UK's economic woes, rather than a eurozone crisis which has yet to fully show up in official statistics.

The amount of pay needed to be in the top 10% of full-time earners increased by 1.9% since 2010, to £52,643; while the threshold for the bottom 10% of full-time workers increased 0.6%, to £14,905.

UK incomes fall 3.5% in real terms, ONS reveals | Money | guardian.co.uk