Stagnant wage growth is condemning lower-income families to flatlining living standards, a think tank has found
British families will not see their living standards improve significantly within their own lifetimes due to a historic collapse in income growth, a new report has found.
Living standards for lower-income families in the UK have grown by just 0.5% a year over the past two decades despite rising employment, think-tank the Resolution Foundation reported on Monday.
The figure suggests that at this rate, it would take 137 years for their incomes to double. That timeframe stands in stark contrast to the 40-year period prior to 2004-05, when incomes doubled at an annual growth rate of 1.8%, the report noted.
The report partially blames the current pressures on the Ukraine conflict, which triggered a global energy crisis that impacted the UK through its energy links with the EU.
The bloc, along with the UK, has sanctioned affordable Russian energy, pressing ahead with plans to abandon it completely. The report notes that household energy costs remain nearly 60% higher and food prices almost 40% higher than pre-conflict levels.
The root cause of the stagnation, meanwhile, is a collapse in pay growth for workers, compounded by severe cuts to social security benefits. The authors suggest that the fundamental link between effort and reward has been broken.
“Families in the lower half of the income distribution have been working harder… yet they have not reaped the rewards in the form of markedly higher living standards growth,” the report states.
Despite this, the authors insist people must work more, specifically disabled people and parents. They also argue that businesses and workers must become more efficient to generate the higher wages needed to improve living standards.
The report calls on the government to revive national productivity, reform the tax and benefits system, and take direct action to ease cost-of-living pressures.
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