Official Data Shows Real Pay Fall for Everyone, But Poorest Worst Hit

We heard a lot at the start of the year about 2014 being the ‘Year of the Pay Rise’. But if those bold claims seem a lifetime ago, today’s statistics from the ONS show why. Across the board, people have experienced a fall in real pay. So if you’ve been struggling to pay the bills, or you’ve felt like the money hasn’t stretched quite as far at the end of the month as it did, you’re right.

However, falling earnings haven’t been the same across the board. Using September’s CPI measure of inflation, we find that those at the edge of the poorest 10% have seen their earnings fall 1.33%, this year. Someone in the middle (the median) has seen a fall of 0.86%, and someone at the edge of the richest 10% has seen a fall of 1.02%. In other words, the poorest have seen a greater fall in their earnings this year than the richest.

The ONS provides a number of other revealing statistics. For example Westminster is the local authority with highest average earnings – at £36,519. The bottom earning local authority is Blackpool, with an average of just £16,126. Without adjusting for inflation, Westminster average earnings have increase over 60% since 1999. Blackpool has seen an increase of around 29%. Interestingly (of course correlation is not necessarily causation!) Blackpool also has the lowest male life expectancy since birth, at just 74.3yrs.

There is also interesting data on pay gaps within and between genders. For example the gap between the richest and poorest women is far higher than the gap between the richest and poorest men. The 90/10 ratio (the difference in earnings between those at the edge of the poorest 10% and those at the edge of the richest 10%) for men is 5.205, but for women it is 7.465, perhaps reflecting the disproportionate number of women working in low paid jobs.

Today’s statistics show that the pay gap between rich and poor is once again widening. We know that extreme inequality hurts our society and wrecks our economy. What we now need, urgently, is for those in business and government to take action to alleviate it. 

John Hood

Media and Communications Manager