CIPD: ‘The decline in average pay for all British workers since 2008 could be as much as 20 to 30 per cent worse than existing estimates show, a think tank has said.
Research by the Resolution Foundation found that Office for National Statistics (ONS) data has under-estimated the drop in wages because it doesn’t include wage growth among the self-employed.
This group of workers accounts for 4.5 million people and is an area of employment that has grown in recent years. ONS data shows that average weekly earnings fell by about 10 per cent from £534.51 a week in March 2008 to £478.71 in April 2014.
But the think tank’s analysis includes wage data from the self-employed group, along with ONS data and surveys from the government and the Bank of England, to reveal that average earnings were actually higher in March 2008 than official data suggests, at £536.60.
This analysis also shows that pay fell more steeply during the recession, calculating that average wages were £468.80 in 2014, representing a fall of 12.7 per cent from the peak.
The study suggests that this means workers are about £3,500 worse off following the recession.
Laura Gardiner, senior analyst at the think tank and report author, said: “Important economic and policy decisions are informed by the official data on wages yet, because it does not capture the one in seven workers who are self-employed, it gives a picture that’s incomplete at best and sometimes misleading.
“Our analysis suggests that relatively high levels of self-employment are here to stay. It should be possible to construct a more comprehensive and timely way of measuring wages across the workforce.”
In response to the report, an ONS spokesperson said: “The Resolution Foundation report acknowledges the practical difficulties in measuring the earnings of the self-employed and its conclusions about the impact of this group on total earnings are, by its own admission, very speculative.
The report makes a strong case for increasing survey coverage but this needs to be considered against the many other demands on ONS resources.”