According to figures from the Institute for Fiscal Studies (IFS), earnings for UK workers are still lower than they were in 2008, having failed to recover in the decade since the financial crisis, with millennials the hardest hit.
Gross domestic product (GDP) is just 11 per cent higher than it was at the peak of the crisis, meaning the economy is £300 billion (16 per cent) smaller than it would have been on pre-crisis trends.
The IFS believes that the most direct effect of this has been the hit to workers’ pay packets.
Average earnings are still three per cent lower than they were in 2008, and 13 per cent lower than expected based on growth rates in the run-up to the crisis.
People in their thirties are the worst hit in terms of pay, with average earnings of seven per cent lower than in 2008, while pay for those in their twenties is five per cent lower. For those aged 60 and above, pay is down one per cent compared to a decade ago.
The latest data from the Office for National Statistics showed wage growth rose more than expected in July, hitting 2.6 per cent, and economists predict growth of around three per cent for the year.
According to the IFS, one positive aspect of lower pay is strong employment growth since 2008, with 2.7 million more people in paid work today compared to a decade ago, with the employment rate at its highest level ever.
The IFS said in its report: “We should never stop reminding ourselves just what an astonishing decade we have just lived through.
“The UK economy has broken record after record, and not generally in a good way: record-low earnings growth, interest rates, productivity growth, and record public borrowing followed by record cuts in public spending.
“On the upside, employment levels are remarkably high and, in spite of how it may feel, the gap between rich and poor has actually narrowed somewhat, but the gap between old and young has grown and grown.”