Companies are more profitable, but workers are feeling the pain of a drop in real wages.

The profitability of UK companies has risen above pre-crisis levels, despite this there is growing concern amongst working families about a significant fall in real wages.

Figures released by the Office for National Statistics (ONS) show that the profitability of UK registered companies has risen by 12.6% in the last quarter of 2017 compared to 11.4 in the same period in 2007. In the public -sector profitability had risen by 19.1% compared to 14% ten years ago. Over the same period real wages have fallen by 4.4%.

Commenting on the fall in real wages TUC general secretary Frances O'Grady said ‘working people are caught in the middle of the longest pay squeeze since Napoleonic times'.

Adding that it was ‘galling to see so many people on poverty pay in the public sector, where profits have shot up'.

Price inflation in the UK is at its highest level since 2012, creating problems that will hit families on low incomes hardest.

Bus and coach fares have risen by 13.9%, meaning that low income families, who are often more dependent on public transport will have to budget for spending an extra £116.15 a year on travel costs. Energy costs have risen by 6.4% and food bills by 4.3%, meaning low income families will need an extra £130 just to cover these basic expenses.
(source Joseph Rowntree Foundation)

As the cost of living rises inexorably wages are struggling to keep pace, workers in Western Europe will see an average wage rise of 0.9%, in the UK wages are likely to decrease by 0.5%.

Benjamin Frost, a senior global manager at Korn Ferry told City AM that UK workers will ‘find themselves worse off than French or German workers when it comes to pay increases’ in what was, he said, going to be a ‘tough year’ for business.

In November inflation hit 3.1%, on the back of a weak pound and fears over the consequences of a hard Brexit, forcing Bank of England chief Mark Carney to write a letter of explanation to the chancellor.

At the time David Morrison, a senior analyst for GKFX told City AM that workers would see their ‘spending power decease’ as wages failed to keep pace with price rises.

Speaking about the fears of her members as they see their incomes swallowed up by ever riding prices TUC general secretary Frances O'Grady said the ‘pay crisis’ should be the government’s first priority, adding that ‘we need a plan to get wages growing with real investment, a higher minimum wage and stronger rights for trade unions'.

The ONS figures showed, she said that Britain ‘not only deserves a pay rise, and that business can afford it too'.