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Average take-home pay now lower than 2004!

  28th January 2011      
 Employment

Panorama recently commissioned the Centre of Economics and Business Studies to carry out research investigating how much worse off employees have become since their wages reached their peak. As a result the research found a distinct decrease in take-home pay for a variety of reasons.

The research, based on salaries actually paid into the bank, has established the average British worker earned £20,148 at the start of 2011. With the sum adjusted for inflation, the average employee took home £1,088 a year less than two years ago. These results suggest a real terms fall of 5% from what employees were earning in the middle of the recession.

When inflation is taken into account it can be seen that average pay has dropped from the start of 2009 when the recession was in full swing and is significantly lower than pay in 2004. In particular the financial services sector took one of the hardest hits, seeing £101 less per month in their pay packet.

After in depth research, Panorama found that the reasons for the low figures is that pay has lagged behind inflation. The fear of unemployment has severely prevented employees asking for more than a modest pay rise. In addition it has become increasingly common for company profits to fall, so the ability for firms to pay has actually prevented wages from rising.

Despite the initial and most common thought that employees are taking pay cuts to avoid losing their jobs, the Panorama report suggests this as only a contributing factor towards the reduction in average pay. It appears that the main influential factor is due to inflation and that salaries have not been increased in conjunction. However with the recent ‘boost in employers recruitment confidence’ perhaps salaries may increase alongside recruitment figures.

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