30 April 2015

The period between 2010-2014 was the worst for living standards for at least half a century (directly comparable records begin in 1960), according to TUC research.

Using ONS data, the TUC analysis compares five-year averages of UK real disposable household income per head with the averages for the preceding five years.

2010-2014 is the only period in which disposable income actually fell since records began.

RHDI – a measure of living standards that takes account of incomes, benefits, taxes and inflation – was 0.6% lower in the five years ending in 2014 than in the five years ending in 2009, when it rose by 6.9%.

The squeeze in living standards then, correlates more closely with the Coalition’s austerity programme than it does with the recession.

The TUC says this provides further evidence that the government’s austerity programme, which began in 2010, is more to blame for the loss of living standards than the financial crisis that preceded it. The government’s deep and rapid cuts killed off the recovery, causing growth to flat-line and wages to remain in decline for years longer than official forecasts.

TUC General Secretary Frances O’Grady said: “Living standards have suffered the worst slump in at least half a century, leaving workers paying a heavy price for the government’s bad choices over the last five years. Austerity has failed, there’s still a major deficit, jobs are less secure and workers’ living standards have fallen.

“We need a government that understands how important pay growth and secure jobs are for a strong economy. If workers don’t have decent wages in their pockets to spend, businesses will struggle to invest and grow.

“Conservative plans for extreme austerity after the election risk killing off the recovery again. It would be Groundhog Day for living standards, making families worse-off and cutting public services down to a stump.”

The IER supports collective bargaining as a tried and tested method of raising living standards and reducing income inequality; building a strong, resilient economy that benefits all.

To find out more about collective bargaining, the IER’s Reconstruction After the Crisis: A Manifesto for Collective Bargaining is available for purchase. Watch Prof. Keith Ewing and John Hendy QC explain why we need collective bargaining.