POLITICS

Workers In Small Firms Earned £2,000 Less Than Previously Thought Under Tory-Lib Dem Coalition

Wages squeeze even tighter than statisticians estimated.

16/04/2017 12:07 BST | Updated 16/04/2017 13:36 BST
PA Archive/PA Images

Fresh evidence of Britain’s pay squeeze has emerged with new figures showing workers in small firms earned £2,000 less than previously thought under the Tory-Liberal Democrat coalition.

Labour seized on revisions by the Office for National Statistics (ONS) which downgraded wages and bonuses by an average of 1.7% between 2010 and 2015, under David Cameron’s first term in office.

Average weekly earnings, a key measure of the health of the economy, were between £7 and £10 less than recorded, with the biggest losses in small businesses working in the manufacturing, construction, financial and service sectors.

Although wages picked up after 2015, the downgrade underlines the pressures felt by many working households since the start of the decade.

ONS
Weekly earnings losses

The Institute for Fiscal Studies also revealed last month that Britons are on course to suffer an unprecedented 15 years of lost earnings growth.

On current forecasts average earnings will be no higher in 2022 than they were in 2007, according to the IFS.

The ONS changes follow criticism from economists that its average weekly earnings measure failed to capture real wage levels as accurately as other indicators such as the Annual Survey of Hours and Earnings (ASHE).

ONS
Earnings, with bonus spikes, revised.

Rebecca Long-Bailey, Shadow Business Secretary, told HufPost UK: “The latest revision to the methodology for calculating earnings for employees in small businesses shows that the level of earnings was less than previously thought during the period 2010 to 2015.

“Added up, between July 2010 to December 2015, earnings for the average employee in a small business were in fact over £2,000 less than previously thought. 

“This is a further indictment of the Conservatives’ already terrible record of protecting the living standards of people in this country and their failure to recognise the experiences and requirements of small businesses.”

But ministers point to the wider health of the economy and the robust jobs market, with unemployment levels continuing to defy projections made during the EU referendum campaign.

Bloomberg via Getty Images
Rebecca Long-Bailey with Shadow Chancellor John McDonnell

A Government spokesperson said: “More people are in work than ever before and real wages are forecast to rise in each year of this parliament. By 2021, living standards will be 2% higher than they were in 2016.

“What’s more, we are making sure that people are able to keep more of what they earn by increasing the personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the Parliament.

“This government also has a strong record of helping small business thrive, which led to a record 5.5 million small businesses in the UK in 2016.

“We will continue to back firms to grow and create jobs by cutting a further £10 billion of red tape, extending business rates relief, tackling late payment culture and improving access to finance.”

The ONS changes to its methodology for calculating average weekly earnings for small firms will kick in formally from this Spring.