LSE: Living standards see “unprecedented” decline

05 June 2017

A briefing from the London School of Economics has described the fall in real wages and family living standards since the recession as “unprecedented in modern history”.

The paper noted that real wage growth in the UK is weaker than in the majority of other OECD countries and has fallen by nearly 5% since 2008, reflecting a 20% shortfall on the 2% annual rise seen from 1980 to the early 2000s.

Almost all groups of individuals and families are no better off than they were in 2008, the authors reported, but young workers have been hardest hit. Real weekly wages plummeting by 16% for workers aged between 18 and 21, which was attributed to lower hours, part-time work and self-employment arrangements.

The proportion of the workforce classified as self-employment has risen from 9% in 2000 to 13% today, but this increase has been among individuals without employees and this group saw median real weekly income drop by nearly 20% between 2007/08 and 2014/15. Indeed, their fall in earnings was worse than people classified as “employees” and people who are self employed with employees of their own. Many people in these self-employment arrangements will be in “gig” economy positions, such as driving for Uber or couriering for Deliveroo, and these people’s employment status has been questioned. Indeed, a tribunal last year found that Uber drivers should be classified as “workers” and therefore eligible for the minimum wage and holiday pay among other basic rights. Deliveroo has recently been taken to task by the IWGB.