Skip to: Content
Skip to: Site Navigation
Skip to: Search


Stefan Karlsson

Average pay in the UK dropped 5 percent over 10 years

Compared to other European countries, Britain has had only a modest problem with unemployment, but earnings have dropped considerably.

By Guest blogger / March 19, 2012

The Union Flags are hung along Regent Street in London in this file photo. Britain has been spared the high unemployment rate of some European countries over the last few years, but the pay of the average worker has fallen by five percent over the past decade.

Carl Court/AP/File

Enlarge

I stumbled in to a British dataset called "GDP and the labour market" and found some interesting things.

Skip to next paragraph

Stefan is an economist currently working in Sweden.

Recent posts

Compared to other countries struck by the economic crisis of the last few years, Britain have so far had only a modest problem with unemployment. It's 8.4% unemployment rate is significantly higher than a few years ago, but compared with the 14-15% unemployment rate in Portugal and Ireland, the nearly 20% unemployment rate in Greece and the 23-24% unemployment rate in Spain, it is low (Italy is more similar to Britain in unemployment with a 9.2% unemployment rate).

As this chart illustrates, Britain has only had a modest drop in employment. If you take Britain's relatively high population growth into account, it looks worse, with a drop in employment relative to population of more than 5%, but that drop is still a lot lower than in Ireland, Portugal, Greece or Spain.

However, in terms of real wages, Britain has fared as bad or worse than the other countries as this chart illustrates.

As you can see, earnings growth have consistently trailed inflation, and if you analyze the data in the release, as I have, you'll find that during the latest 5 year period the average real earnings of people with jobs in Britain has fallen as much as 10%. This reflects a big drop in the number of hours employed Britons work even as productivity has been roughly unchanged.

So while Britain's more inflationary path seems to have limited its unemployment problem, it hasn't helped overall growth, and has contributed to a greater decline in real wages for the employed.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on stefanmikarlsson.blogspot.com.

  • Weekly review of global news and ideas
  • Balanced, insightful and trustworthy
  • Subscribe in print or digital

Special Offer

 

Doing Good

 

What happens when ordinary people decide to pay it forward? Extraordinary change...

Danny Bent poses at the starting line of the Boston Marathon in Hopkinton, Mass.

After the Boston Marathon bombings, Danny Bent took on a cross-country challenge

The athlete-adventurer co-founded a relay run called One Run for Boston that started in Los Angeles and ended at the marathon finish line to raise funds for victims.

 
 
Become a fan! Follow us! Google+ YouTube See our feeds!