Average wages are not expected to rise in real terms until late 2014 after a period of stagnation and decline, according to a report by Resolution Foundation.
It found that, if the typical earnings for these workers rose by an average of 1.1% a year above inflation, then their earnings would recover to £22,000 a year by 2023, the equivalent of where they stood in 2008.
However, without the prolonged downturn since 2008, their typical earnings might now be expected to stand at £27,500. To reach that level over the next decade would require annual real earnings growth of 3.3%.
The report also found:
- The UK has the second largest share of low-paid workers in the developed world; with only the US having a greater share.
- Using the living wage (£8.55 per hour in London, £7.45 in the rest of the UK) as a threshold, 20% of people are low paid.
- The sector with the highest proportion of low-paid workers in Britain is hotels and restaurants, where more than two-thirds are low paid.
- The wages of mothers grew more quickly than those of other women between 1994-95 and 2007-08. In contrast, fathers lost out compared to other men.
- More than two-thirds of households in the low-to-middle income group have no pension or a frozen pension, compared with 41% among the higher-income group.
Matthew Whittaker, senior economist at the Resolution Foundation and author of the report, said: “There is a long road to travel just to get back to where living standards stood before the crisis, and the prospects of actually recovering the ground lost over recent years appear vanishingly thin.”
Gavin Kelly, chief executive of the Resolution Foundation, added: “Given that reductions in tax credits and benefits appear likely after 2015, regardless of the election outcome, it is vital that all parties bring forward ideas for supporting wage growth and helping far more people to work.
“Without steady growth in earnings living standards will continue to stagnate. We can’t just return to the skewed growth of the past when too many on low and middle incomes failed to keep up with overall rises in prosperity.”