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News Article

‘Painful’ Pay Cuts Saved 800,000 Jobs After Recession

Oct 18, 2018

The reason why so many Brits are able to fill offices to let in Newton-Ayecliffe is because employees took significant pay cuts in the years following the recession.

This is according to the latest research from the Resolution Foundation, which found as many as 800,000 jobs were saved due to real pay declines.

Findings from the report, funded by the Nuffield Foundation, stated average earnings dropped by around seven per cent between 2009 and 2014, amounting to £1 billion of weekly wages across the UK.

Commenting on the statistics, Stephen Clarke, senior economic analyst at the Resolution Foundation, stated millions of employees have been “suffering years of shrinking pay packets”.

“The scale of the pay squeeze took everyone by surprise, with most economists predicting far higher unemployment instead,” Mr Clarke stated. He noted that workers helped to absorb the impact of the crisis through reductions in their salaries.

Some professions were hit particularly hard with the pay squeezes, such as software developers, engineers and teachers who felt a reduction of real pay by 14.5 per cent. Those aged between 22 and 29 also fared badly, with real salaries declining by 11 per cent.

Despite over a million people losing their jobs between 2007 and 2012, the Resolution Foundation predicted this would have been significantly more if pay had remained the same.

As a result of the squeeze, the Resolution Foundation’s Count the Pennies report revealed it will take until 2099 for real wages to double in value from today’s figures. Before the financial crisis, this doubling typically happened every 29 years instead.


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