Workers are £2,234 worse off than three years ago because the cost of living is rising faster than wages, warns the TUC

  • Real wages 8.5% lower in March 2013 than in 2010, research shows
  • Consumer Prices Index falls to 2.4% but still much higher than pay rises

By Matt Chorley, Mailonline Political Editor


Workers are on average £2,234 worse off than three years ago because wage rises have failed to keep pace with the soaring cost of living.

Figures released today revealed a bigger than expected drop in the headline rate of inflation from 2.8 per cent to 2.4 per cent in April.

But rising food and utility bills still outstrip salary levels, which have barely risen.

Research by the TUC shows how annual earnings have fallen from £26,310 in March 2010 to £24,076 in March 2013

Research by the TUC shows how annual earnings have fallen from £26,310 in March 2010 to £24,076 in March 2013

The Office for National Statistics said lower fuel costs and air fares helped to reduce the consumer prices index (CPI) inflation to 2.4 per cent in April.

But experts said the drop will only be temporary, with inflation expected to spike above 3 per cent in the summer.

Inflation remains much higher than the 0.4 per cent average increase in wages in the first quarter versus a year earlier.


Analysis by the TUC revealed the devastating impact of rising living costs on real incomes, which have fallen by 8.5 per cent.

It found worker average salaries in March 2013 were £2,234 down on their 2010 level.

Private sector pay in the first three months of 2013 was unchanged compared to the same time last year while public sector pay was up

Private sector pay in the first three months of 2013 was unchanged compared to the same time last year while public sector pay was up

TUC General Secretary Frances O’Grady said: ‘Inflation may have slowed a little but there is no hiding the fact that prices are still rising over three times faster than wages.

‘Average pay packets have fallen by nearly 10 per cent over the last three years – eroding the spending power of households and eating away at the value of savings for those families still fortunate enough to have them.’


Mortgage lenders have reported one of their strongest months since 2008 in a further sign that Government efforts are prompting an upturn in the housing market. 

The Council of Mortgage Lenders (CML) estimates that £12.1 billion worth of loans were advanced in April, marking an increase of one fifth (21 per cent) year-on-year. 

The total also represents a 4 per cent increase compared with March and follows a string of studies indicating that Government initiatives to reinvigorate mortgage borrowing are having an impact.

CML chief economist Bob Pannell said: 'The true underlying position is that April is likely to have been one of the strongest months for lending activity since late 2008.'

She warned that without real increases in wages, consumer spending will remain weak and the economy will continue to struggle.

‘The government’s self-defeating austerity programme has added to this pressure on family budgets, with cuts to tax credits, a freeze in child benefit and a VAT hike,’ she added.

Last week it emerged workers in the private sector have seen no increase in pay in the last year.

A headline 0.4 per cent rise in total has been entirely fuelled by increases for public sector staff who saw earnings rise by 1.4 per cent.

Even these modest rises in pay have been hugely outstripped by increases in the cost of living, leaving millions worse off in real terms.

Today the Treasury said the drop in inflation was ‘good news for families and businesses’, adding the economy is ‘healing’.

Falls in the price of Brent crude oil have seen cuts in petrol and diesel costs. Petrol prices fell by 2.1p over the month to 136.4p a litre compared with a 3.2p rise a year earlier. Diesel was 3.9p lower to 141.7p per litre, compared with a 2.1p rise a year ago.

Air fares fell by 6.4 per cent on a month earlier, compared with a rise of 7.4 per cent a year earlier.

However, food and drinks costs continue to rises – up 0.7 per cent month-on-month. Costs have been pushed up after the freezing winter ruined crops.

A Treasury spokesman said: ‘This is good news for families and businesses. Inflation is down by more than a half from its peak.

‘The Government has taken consistent action to help with the cost of living. Fuel duty and council tax have been frozen and hundreds of pounds has gone back into people's pockets through increases in the tax free personal allowance.

‘As the governor of the Bank of England indicated last week, the economy is healing. The deficit is down by a third, more than a million and a quarter new private sector jobs have been created and interest rates remain near record lows.’

The comments below have not been moderated.

And the rest! I'm public sector. No pay rise for 4 years, not one this year either. We no longer get tax credits, nor child benefit. I pay an extra £130 a month into my pension (but will have to work 8 years longer to get it and it will be 30% less than it was going to be for the 30 years service I've already done!). I have calculated that I am, approximately, £7,000 worse off a year (£600 per MONTH!) since the coalition came in, taking into account inflation. We now have to borrow money from our teenage daughter for half the month to make ends meet! Credit cards maxed out, overdraft at maximum too. Now before all you private sector people start bleating, look at it this way - that's £7,000 I'm not spending on the economy. And people wonder why there is no growth!! Meanwhile, MPs are giving themselves £10,000 pay rises, or is it £20,000. That people, is the reality.

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Boardroom pay still going up of course, and tax avoidance....

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Nothing new in this. Inflation, greed and self preservation has always ruled. prices go up, middle men (or women, sorry we have to put that in dont we), will pass on costs, retailers etc will pass it on to US

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Three years ago mmmm, bow there's a coincidence - Tony, Bolton, 21/5/2013 23:13>>>>>>>>>>> The "report" was produced by the TUC, the people who control Red Ed and have aspirations to ru(i)n the country.

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My business has not paid a wage increase for 4 years and when my staff complain I tell them that if they decide who is going to lose their jobs I will raise their pay, unsuprisingly no one volunteers. Wage inflation almost killed British business and now is the time for restraint.------------- pkvanderbyl, rhodesia nottinghamshire, United Kingdom, 21/5/2013 20:23--------------- It's people like you who give managers a bad name, If you're asking your workers to work for 4 years without a pay rise then they are having a pay cut, as inflation has risen since then. I can just imagine what they say about you behind your back and one thing for sure they certainly won't be working any harder than they can get away with. Idiot management, I met many like you in my years of management. Good managers treat their staff well, that way they get higher productivity and know they can turn their back knowing the staff will still work hard. Managers get the staff they deserve

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How much did they pay for this nugget of information that those of us struggling have known for years..... Madness, inflation dropped slightly today, lets see if the banks cash in and up their mortgage rates to knock us all down further, like the gas, electric, supermarkets and all other have done.... I will have to find more stuff to sell to pay the bills, wrong!

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Three years ago mmmm, bow there's a coincidence

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I remember a weeks shopping of milk, bread and cheese cost around 25 pounds in 1994, 40 pounds in 2001, and 60 pounds back in 2009.

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Don't forget that call-me-Dave and his front bench of millionaires say "we're all in this together". That will make you feel much happier!

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I already worse off since 2011, and sadly.. every thing so pricy now a days. I don't know if I can cope anymore. - Thinkpositive , here, United Kingdom, 21/5/2013 21:20 You are not alone. Things have to change. Soon. Don't give up

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