Downturn in wages predicted

The Institute for Fiscal Studies (IFS) has said that workers will earn less in real wages in 2021 than they did in 2008, with a squeeze on pay lasting for over 10 years. Paul Johnson, director of the IFS, said, "This has, for sure, been the worst decade for living standards certainly since the last war and probably since the 1920s. We have seen no increase in average incomes so far and it does not look like we are going to get much of an increase over the next four or five years either." He said that, the "outlook for living standards and for the public finances has deteriorated pretty sharply over the last nine months". Real average earnings, which factor in the rising cost of living, were forecast to rise by less than 5% between now and 2021, which is 3.7% lower than was projected in March. Mr Johnson said, "One cannot stress enough how dreadful that is, more than a decade without real earnings growth. We have certainly not seen a period remotely like it in the last 70 years." The IFS said that the biggest impact on income in recent years has been felt by younger workers. Those aged 60 and over, in contrast, have seen living standards rise.  [source: GTAssociates]