Ten years on from the financial crisis, people’s wages are still on average three percent below what they were before the crash.
Research conducted by the Institute for Fiscal Studies (IFS) shows that, on average, people are earning £800 less in real terms. In fact, people aged between 30 and 39 now are earning £2,100 a year less than people of the same age group in 2008 – a drop of 7.2 percent.
Those in their 20s have seen a decline of five percent, compared with the drop for the over-60s in work of 0.7 percent, or £130.
At the time of the financial crisis in 2008, the average wage was £24,100, while in 2017, it was £23,300.
“What has proved most remarkable about the crisis and recession though was not its initial scale but the persistence of its effects. We had got used to the economy, and with it the public finances and household incomes, bouncing back strongly following previous downturns. That has not happened this time,” said IFS director Paul Johnson and senior research economist Jonathan Cribb in the report.
The think tank found gross national product (GDP) is just 11 percent higher today than it was at its pre-crisis peak in 2007–08. As a result the economy is 16 percent, or £300bn, smaller than it would have been had it followed the pre-crisis trend. GDP per capita is now £5,900 per person lower than it might have been had pre-crisis trends continued.
Not only that, but it found that if wage growth trends between 1998 and 2008 had continued, people would on average be earning £3,500 more.
“We should never stop reminding ourselves just what an astonishing decade we have just lived through, and continue to live through,” said Johnson. “The UK economy has broken record after record, and not generally in a good way: record low earnings growth, record low interest rates, record low productivity growth, record public borrowing followed by record cuts in public spending.
“On the upside employment levels are remarkably high and, in spite of how it may feel, the gap between rich and poor has actually narrowed somewhat, but the gap between old and young has grown and grown. With public debt twice its pre-crisis level, economic growth remaining sluggish and the population ageing rapidly there will be no shortage of tough decisions over the coming decade.”