U.K. Workers Worse Off Than Pre-Crisis as Generational Gap Opensby
Incomes of non-retired households still 1.2% below 2008 level
In contrast, retired households have seen incomes surge 13%
U.K. inequality has narrowed, but workers are still worse off than before the financial crisis, according to new data that may fan the long-running debate on wealth disparity.
Median U.K. household disposable income rose 2.2 percent to 26,332 pounds ($32,000) in the 12 months through March, the Office for National Statistics said in a report on Tuesday. But that gain hides disparities between working households, whose 0.2 percent increase lagged the 3.1 percent enjoyed by retired households. That left the median income for workers 1.2 percent below its pre-crisis value.
“Household incomes are above their pre-downturn peak overall, but not everyone is better off,” said Claudia Wells, head of household income and expenditure analysis at the ONS.
The report comes after the Institute for Fiscal Studies said British workers are facing the longest period of wage stagnation in at least 70 years as faster inflation and lower productivity eat into pay packets. Some commentators say inequality is rising in the U.K., and it’s been cited as driving the rise of a populist and nationalistic backlash in politics and may have even partly fueled the Brexit vote.
The latest ONS data contrasts with the assertion that incomes are diverging, with the figures showing the least well-off households have benefited from a bigger rise over the past decade. The median disposable income for the poorest fifth of households rose by 5.1 percent in the 12 months through March, while it fell 1.9 percent for the richest fifth.
Still, perceptions of rising inequality have meant the issue is receiving increasing attention, with Bank of England Governor Mark Carney devoting a speech to it last month. He questioned the view that disparity in incomes was growing, saying the picture was complex, “but in general suggests relatively stable but high levels of overall inequality.” In the governor’s view, made in his last major speech of 2016, “it is no wonder that many question their prospects.”
Jeremy Corbyn, the leader of the U.K.’s opposition Labour Party, said on Tuesday he backs introducing a limit on high earnings to prevent inequality increasing in Britain after Brexit. The Adam Smith Institute, a London-based research group, criticized the idea, saying it would prevent the U.K. from attracting the best executives to run its biggest companies.
“I would like there to be some kind of high-earnings cap,” Corbyn told BBC Radio 4. “We cannot set ourselves up to be a grossly unequal bargain-basement economy on the shores of Europe.”