UK incomes fall 3.5% in real terms, ONS reveals

UK households are facing pay cuts in real terms of more than 3.5% as salary increases fail to keep pace with inflation, official figures reveal.

The median salary for a full-time worker in the UK rose 1.4% in 2011 to £26,244, against a headline CPI inflation rate of 5% or higher, according to the Annual Survey of Hours and Earnings from the Office for National Statistics.

Overall earnings growth was even lower, with the average UK salary increasing just 0.5% on 2010 levels once part-time workers are included.

This was driven by a shift to part-time work as a result of high unemployment and low economic growth: the indicative figures for 2011 included 380,000 fewer full-time workers than a year before, with 72,000 more part-time employees.

Progress in closing the gender pay gap has also slowed, with women in full-time employment earning on average £5,409 less than men – the gap narrowed by £179 in 2010 compared with £558 in 2009.

At such a rate, it would take until 2041 for the earnings of women working full-time to match those of men.

The headline figures also masked sizeable falls in pay for some of the UK’s lowest-earning professions – and sizeable salary boosts for senior managers and directors.

Workers in “elementary occupations”, a classification including labourers, farm workers, postal workers and others, saw their typical pay fall 0.9% against its 2010 level, while professional pay rose 1% and managerial salaries rose 0.5%.

Directors and chief executives of leading organisations enjoyed the most sizeable pay rises, with median earnings up 15% to £112,157, in part a result of trends shifting earnings to basic pay and away from bonuses.

Salaries of senior corporate managers also increased substantially – up 7.1% year-on-year to £77,679.

By contrast, the annual pay of waiters and waitresses (mostly part-time workers) fell 11.2% year-on-year to £5,660 – the most substantial drop of any group of workers. Cleaning staff earnings fell 3.4%.

The TUC general secretary, Brendan Barber, said the latest figures showed the UK’s sluggish economic growth was due to a squeeze on wages rather than the wider economic crises.

“Today’s figures confirm that 2011 has been a year of wage stagnation, with pay rises far outstripped by inflation, and low-paid employees being squeezed particularly hard,” he said

“Falling wages and self-defeating austerity have been the main reasons for the UK’s economic woes, rather than a eurozone crisis which has yet to fully show up in official statistics.

The amount of pay needed to be in the top 10% of full-time earners increased by 1.9% since 2010, to £52,643; while the threshold for the bottom 10% of full-time workers increased 0.6%, to £14,905.