Real wages fall leaves consumers ‘struggling’

The most prolonged and severe fall in real wages since World War Two has left many consumers struggling financially, it has been claimed.

Analysis …

The most prolonged and severe fall in real wages since World War Two has left many consumers struggling financially, it has been claimed.

Analysis by the Chartered Institute of Personnel and Development (CIPD) has discovered the seriousness of the situation, which will not be addressed until the UK's productivity record is improved. 

Pay increases are also set to be limited in 2014, as many employees think any rise they do get will be below inflation, as was the case for them in 2013. Worryingly, a third of workers are not expecting any type of increase. 

With household bills increasing steadily, consumers will find their finances are already under pressure. This is why above-inflation pay rises are vital, as it will stop the majority of them from falling into a debt trap. 

If the status quo is maintained, many Britons will find themselves in an unhealthy position financially and may be forced to rely on credit to get by.  

In 2013, 54 per cent of private sector employees had a pay rise, followed by 51 per cent in the voluntary sector and 43 per cent in the public sector. However, only 36 per cent received a real-terms rise to improve standards of living.

Mark Beatson, chief economist at CIPD, noted progress will not be possible if politicians simply continue "trading blows over statistical analyses".

"We need to recognise as a nation that real increases in pay will only be delivered through increases in productivity – and that for this to happen we need employers, employees and policy makers to come together in a combined effort to improve UK productivity," he added.

Mr Beatson is calling for a shared agenda so that productivity can be improved, which will make wage rises more sustainable for employers. On top of this, he thinks managers need to look at others ways of motivating staff. 

By James Francis 

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