Real wages tumble to below 2003 levels

 
Julian Harris
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REAL wages have sunk to levels last seen a decade ago, due to stubborn inflation and sluggish pay growth.

Including the effects of inflation, the median average UK wage last year was even lower than it was in 2003, new data revealed yesterday.

The Office for National Statistics (ONS) said that the median hourly wage dropped to £11.21 in 2012 – below 2003, when it would have been the equivalent of £11.24 when adjusted to last year’s price levels.

Real wages peaked in 2009 when they reached an equivalent of £12.25 per hour, adjusted to 2012 prices – yet they have been on the decline since, partly due to the UK’s stubbornly high inflation.

The consumer price index measure of inflation was confirmed earlier this week at 2.7 per cent for January, the 38th straight month that it has held above the Bank of England’s two per cent target.

Yesterday, the ONS figures also revealed a stark drop in the median average real wage of the self-employed. Having touched a peak of £281 per week in 2006/07, at constant 2012 prices, it was down to £212 last year.

And London’s self-employed have seen their median weekly pay drop from a high of £378 in 2007/08 to just £250 in 2012.

“In April-June 2012, self-employed people comprised 14 per cent of people in employment in the UK and 18 per cent of people in employment in London,” the ONS report added.