Average pay is 7% lower than before the recession and 20% behind where it would have been if the economy had continued to grow based on pre-recession trends, according to a report by the Confederation of British Industry (CBI).
Its Making Britain work for everyone: Facing up to challenges in our labour market report found, while virtually everyone has been affected, it is the lowest paid who have been hit hardest by inflation.
It also found the greatest difference in pay is between people with a degree and those with no qualifications, confirming that skills are essential to raising pay.
Employees with degrees received higher pay rises than those with other higher-level qualifications. Those people, in turn, received higher pay rises than those with A-levels, GCSEs or no qualifications.
Katja Hall (pictured), deputy director-general of the CBI, said: “We must make sure growth makes a difference to everyone and we need long-term solutions that lead to long-term prosperity.
“Policies with short-term appeal are unlikely to deliver growth for all in the future.
“Our labour market has a strong history of delivering new jobs and pay rises, but some people are still being left behind. And who you are has far too much influence on your ability to find a job and progress in your career.
“We need to help groups at risk of disadvantage in the jobs market through better routes into higher-skilled, higher-paid work.
“Organisations must also do more to raise productivity to drive long-term growth and make higher pay rises possible.
“The UK is the only developed nation where productivity hasn’t been restored to pre-recession levels.”