IFS: Top earners' wages worse affected by the financial crisis

Jessica Morris
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Good news for workers (Source: Getty)

High earners saw their pay packets pinched the most during the global financial crisis, but pay will pick up across the board this year, according to new research by the Institute for Fiscal Studies (IFS).

Wage increases would be buoyed by pay rises alongside the low rate of inflation, which is being dragged down by crumbling oil prices, the IFS said.

The report identifies winners and losers from the impact of the global financial crisis on real wages, and shows the effects have been markedly different for certain groups.

Young peoples' wages have struggled to catch up, with average hourly pay for 22 to 29-year olds nine per cent lower last year than in 2008. Meanwhile, the average pay of those aged 60 or over had recovered.

Men saw their median hour wages slip 7.3 per cent between 2008 and 2014, while during the same period women's wages fell just 2.5 per cent.

"Almost all groups have seen real wages fall since the recession. The pay of young adults remains well below its pre-crisis level after particularly large falls between 2008 and 2011, while the average pay of those aged 60 and over has already recovered," said Jonathan Cribb, research economist and an author of the report at the IFS.

"Women have seen much smaller falls than men. Falls for the low-paid have been somewhat smaller than for those on higher pay, driven by trends since 2011," Cribb said.

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