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Millions of Brits stuck in low wage jobs despite economic recovery

Millions of Brits stuck in low wage jobs despite economic recovery
Five million Britons are working in low paid jobs despite the UK being the fastest growing economy in Europe, a leading think tank has warned.

The research, produced by the Resolution Foundation, suggests those earning less than two thirds of median hourly pay – currently £7.69 per hour – rose by a quarter of a million people since 2013, to 5.2 million people.

The report also highlights that those on low income wages were less likely to move out of their jobs, with the majority of people finding themselves stuck on the same wage over the past five years.

“While recent months have brought much welcome news on the number of people moving into employment, the squeeze on real earnings continues,” said the Resolution Foundation’s chief economist Matthew Whittaker.

“While low pay is likely to be better than no pay at all, it's troubling that the number of low-paid workers across Britain reached a record high last year.”

UK median hourly real wages 1997-2013. 2 things stand out: small growth in 2013 & weakness predates 2008. pic.twitter.com/jJhkyzrT84

— Duncan Weldon (@DuncanWeldon) October 27, 2014

Whittaker said the government needs to look more closely at the kind of jobs being created, the industries that are growing and the ability of people to move from one job or sector to the other “if we're really going to get to grips with low pay in Britain today,” he added.

Many have blamed the current coalition government for wage stagnation, arguing that its austerity policies, combined with its strategy of low inflation, have stagnated pay for UK households.

According to the opposition Labour Party, average wages after inflation are down £1,600 since 2010, while academics from the University of Bath estimate that Britons have lost an average of £5,000 per year due to wage depreciation.

“The economy is on the road to recovery. With more people in work than ever before, the Government wants to help all workers share the benefits of economic growth,” a spokesperson from the Department of Business, Innovation & Skills said.

“That is why we have taken continued action to help low-paid workers by taking lower earners out of income tax and asking the Low Pay Commission to consider how we can further increase the real value of the national minimum wage, without having an adverse impact on jobs,” they added.

— ResolutionFoundation (@resfoundation) October 15, 2014

The report comes in the wake of Treasury figures published earlier this month, showing the UK deficit has shot up by £48 million since 2010, despite the coalition government claiming they would make “balancing the books” on the economy their main priority.

The figures also showed the government was facing a tax ‘black hole’ over around £25 billion – one of the highest recorded in recent times, according to the Office of Budget Responsibility.

Reacting to the Resolution Foundation report, the Trade Union Congress, which held a 90,000 strong demonstration demanding pay rises earlier this month, said that while the UK economy was growing, ordinary Britons were still feeling the consequences of austerity policies.

“Many of the jobs created since the crash are very much of the low-paid, casual and zero-hours variety,” said TUC General Secretary Frances O’Grady.

“This risks many people and their families simply being left behind, unable to share in any benefit from the economic recovery – while those at the top take an increasing share of the nation's wealth.”