UK pay gap widens, millions in dire straits

The wages of “lower to middle income” workers are set to collapse, according to a report published last week, with wage rates in 2015 expected to be no higher than they were in 2001. This comes after a long period in which the wages of such workers were stagnant or fell, even before the economic collapse of 2008.

The report, “Growth without Gain”, published by the Resolution Trust, evaluates the living standards of the 11 million people on low to middle incomes - households without children earning £12,000-£30,000 a year, to households with three children earning £19,200-£48,500 - over a 30-year timeframe. From 1970 to 1977 there was moderate overall wage growth, with “little, if any, increase in inequality,” it states.

Between 1977 to 2003 wages rose overall, particularly for women workers. However, this was accompanied by “soaring” wage inequality....If this period was characterised by a “fanning out” of wages, with middle earners pulling ahead of those lower down, and those in top leaping ahead, wages stagnated for the bottom half of the population. In fact, disposable income per head fell in every English region outside London...The path was blazed by the United States, where the wages of a middle-income earner in 2009 was no more than that of his or her equivalent in 1975, the report states. This again is despite US GDP more than doubling over the same period...Germany is given as another example of this phenomenon...

The OECD...downgraded its forecast for UK economic growth this year from 1.5 to 1.4 per cent and 2 to 1.8 per cent in 2012. Despite the government austerity cuts, government spending in April was at an all-time high. This was primarily due to interest repayments, which now accounts for 7.5 percent of all annual government spending... household spending fell by 0.6 percent in the first three months of the year. Business investment collapsed by 7.1 percent in the same period. “Were it not for the sharp decline in imports, due to some erratic items, the UK would now officially be back in recession. And indeed, as far as the domestic economy is concerned, it is already there.”

http://www.wsws.org/articles/2011/may2011/ukec-m31.shtml