UK workers suffer heaviest fall among G20 countries in real wages

UK workers saw the biggest fall in real wages of all major G20 countries in the three years to 2013, the International Labour Organisation (ILO) said.

They fared worse in terms of falling real pay than the bailed-out eurozone economies – Portugal, Spain and Ireland – apart from Greece.

Wages in Japan and Italy also declined during the period but at a slower rate than in the UK, even as real terms pay increased in the US, France, Germany, Canada and Australia.

According to Patrick Belser, senior economist at ILO and author of the report, in the UK in 2008, there was some positive growth of real wages whereas some other countries had stagnant or declining wages – such as Japan.

Then what was seen subsequently was a continuous fall in wages to 2013. He added, the ILO expected wages to be at best flat this year, and they would most likely decline.

The biggest fall in UK wages adjusted for inflation came in 2011, when they fell by 3.5 per cent, while in Italy, which was one of the countries hit hardest by the eurozone crisis, real pay declined by only 1.9 per cent.

Meanwhile, wage growth in industrialised countries had been almost zero in the past two years, the International Labour Organisation said Friday, warning that the trend was hurting economic growth, Alliance News reported.

Real wages in these countries were up 0.1 per cent in 2012 and 0.2 per cent in 2013, below the respective global averages of 2.2 and 2 per cent for these years.

According to Sandra Polaski, the ILO's policy chief, this had weighed on overall economic performance, leading to sluggish household demand in most of these economies and the increasing risk of deflation in the eurozone.

Over the past 14 years wages had grown more slowly than labour productivity in this group of countries the UN labour agency said.

The increase in global workers' earnings last year was once again driven by developing and emerging economies, especially in Asia, Central Asia and Latin America.

The biggest single contributor to the overall rise was China, owing to the size of its economy and its wage increase of 7.3 per cent.

The increase would have been only 1.1 per cent, without China.