Report warns of stagnation in living standards for millions of households
Millions of families may witness a decade of stagnant living standards due to low pay rises and cuts in jobs, according to a new report.
In a report by the Commission on Living Standards, the Resolution Foundation (a British think-tank) has said that low and middle-income households may not feel the positive impact of any economic recovery unless measures are taken to ensure growth is shared over the next ten years.
Although the UK has finally come out from its double-dip recession in the third quarter of 2012, according to the official figures published last week, the report says that as it will take some years before economic output returns to high levels seen before the financial crisis, it will take living standards for some people even longer to recover.
It warned that even with a return to stable growth, a large number of households in the UK will be no better off in 2020 than they were in 2000.
The report also suggested some steps to deal with this issue, including recommending that state subsidies be used to amplify employment opportunities. The Resolution Foundation warned if this is not implemented, high unemployment will persist in pushing down wages and lead to lower standards of living for this socio-economic group, identified by PM David Cameron as those “who strive to make a better life for themselves and their families”.
The Resolution Foundation’s report concluded: “On current trends the outlook for the bottom half of the working population is bleak even once growth returns.
“A typical low income household in 2020 is set to have an income 15 per cent lower than an equivalent household in 2008, a return to income levels not seen since 1993.
“This stagnation of living standards can be averted if action is taken.
“Success in boosting low pay, raising skills, and increasing female employment could see a typical middle income family better off by £1,600 (after inflation) a year by 2020.”