Home Business News ‘Scandalous’ poor wage growth sees London workers £50,000 worse off since 2010

‘Scandalous’ poor wage growth sees London workers £50,000 worse off since 2010

by LLB political Reporter
9th Jun 23 10:03 am

Workers in London are a staggering £50,000 worse off since 2010 due to ‘scandalous’ poor wage growth under the current Government, according to new analysis from the Mayor of London, Sadiq Khan.

Economists from the Greater London Authority (GLA) have for the first time analysed trends in pay in London and the UK from 2010 to 2022 and compared them to inflation rates over that period. The findings reveal that the average London worker is losing out on thousands of pounds per year.

In April 2022, the annual salary for employees in London after accounting for inflation was £36,700. But GLA findings reveal that if annual wage growth after 2010 had followed the same trend from the decade before, the average pay for workers in the capital would have been £47,600 – more than £10,000 just in 2022, or 20 per cent above 2010 levels. The cumulative impact of year-on-year poor wage growth under this Government amounts to nearly £50,000 since 2010.

As a hypothetical example, a London-based teacher who earned £30,000 in 2010 and currently earns £37,000 could be earning £46,000 today if wage growth had followed previous patterns.

As London and the entire country continues to grapple with the cost-of-living-crisis, the Mayor believes the Government should be doing much more to tackle poor wage growth, which is harming millions of people.

Sadiq is particularly concerned that wage growth has failed to keep pace with soaring inflation in recent years. When the inflation rate outstrips wage growth, workers lose money in real terms, as they need to spend a higher proportion of their wages to buy the same goods.

To reverse the trend, Sadiq is today calling on Government to turbo-boost productivity by investing in the capital. With London accounting for half the UK’s productivity, Sadiq argues that there is no alternative route to national economic renewal without investing in the capital.

In particular, he wants to see a major programme of affordable housing investment that will also create jobs and raise disposable incomes and more affordable commercial properties so businesses have more money to invest in research, training and equipment which can boost productivity.

He also thinks Government should promote innovative economic sectors in London and do more to reduce inequality and extend opportunities for more Londoners to develop their skills and participate in the labour market.

To boost productivity and improve wage growth in London and around the country, Sadiq is calling on the Government to:

  • Increase the supply of affordable housing in London. Housing affordability is undermining London’s labour productivity and ability to attract high-skilled talent. Sadiq has already started a record-breaking 116,000 genuinely affordable homes, but research has showed that the capital needs an additional £4.9bn a year from Government to meet demand.
  • Increase government and private-sector spending on research and development and promote ‘innovation clusters’ in London
  • Increase transportation and infrastructure investment in London.
  • Reduce deep social and economic inequalities within London and across the UK that are hampering productivity growth.

The Mayor of London, Sadiq Khan, said: “It is absolutely scandalous that millions of people in London and around the country have effectively become poorer over the last decade, losing out on up to £50,000, because their wages have not kept up with cost of living under the current Government.

“While the focus throughout this awful cost-of-living crisis has quite rightly been on rising food and energy prices, the Government should have done much more to tackle sluggish wage growth, which harms millions of people.

“London is the engine of the UK economy – and when the capital succeeds so does the rest of the country. That is why we need to see the Government urgently invest in the capital and turbo-boost productivity and wages.

“This has been a lost decade of wage growth. The Government needs to take immediate action to buck the trend and help put more money in the pockets of hard-working people.”

Professor Tony Travers, Director of London School Economics, said: “Low productivity is a UK-wide problem and London, despite appearances to the contrary, is not immune from it. Investment in skills and housing, in particular, are essential to delivering better life-chances for individuals and a more productive economy for both London and the UK.”

Miatta Fahnbulleh, Chief Executive Officer of the New Economics Foundation, said: “The Government has presided over a fall in living standards over the last 13 years and millions of Londoners have paid the price. We urgently need a plan to boost productivity and wages in the capital to reverse this trend.

“Investment in a major council housing programme in London would reduce the cost of living by building more homes that Londoners can afford, create good jobs and provide a much-needed boost to the economy. Good for London and good for the rest of the economy.”

Sadiq continues to do all he can to help Londoners through the cost-of-living-crisis.

As well as investing £3.46bn into building the genuinely affordable homes Londoners need and providing an emergency £130m to provide free school meals to primary school children in London for the next academic year, the Mayor is currently spending more than £80m to help those struggling with the rising cost of living.

That includes more than £50m to tackle fuel poverty through the Mayor’s Warmer Homes programme and energy advice services, more than £20m to improve security for private renters and house Londoners who are rough sleeping or homeless, more than £5m to connect Londoners with welfare advice, and £1.1m over three years to support local efforts to tackle food insecurity. He is also spending £400m on skills and employment programmes to support Londoners in finding more secure and better paid work.

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