Weekly wages drop by 5.8%
Published: 14 May, 2009
LONDON: Weekly wages have fallen at their fastest annual rate in at least eight years after City bonuses were slashed amid the banking crisis, official figures revealed. The average weekly earnings in the UK fell 5.8% to £459.10 year-on-year in February, according to the Office for National Statistics.
The drop – the largest since the reports began collecting the data in 2001 – came after bonuses in the financial services sector more than halved from £1312.80 a week to £549.90 as the credit crunch took its toll on the sector.
Weekly earnings in the UK have only fallen twice on an annual basis in the past eight years, having also dropped by 1.9% in January.
The finance sector was not alone in being hit by salary falls, with the data also revealing the recession has impacted wages across the manufacturing sector, as well as the hotels and restaurant and wider services sectors.
Weekly wages in the manufacturing sector fell to £499.80 in February against £502 a year earlier, with take-home pay reduced as workers saw their bonuses cut by more than a fifth.
In the hotels and restaurants sector, which has among the lowest wages, weekly bonuses fell by more than 24%, leaving the wage at £214.90.
Many private sector employers have frozen salaries or even cut pay in this year's round of wage negotiations to cope with the recession.
The public sector has so far escaped much of the impact, with average weekly earnings actually rising by 3.2% year-on-year in February, although its wage negotiations take place later, in April.
Philip Shaw, economist at Investec, said January and February may have seen the worst of the wage falls, due to the New Year pay changes and said there was hope 2010 figures could start to show slight growth.