Wages down as prices and profits soar. Corporate Britain has is it far too easy

Real wages fell by 4.4 per cent between the third quarter of 2007 and the third quarter of 2017, profitability has grown from 11.4 per cent to 12.6 per cent over the same period

British workers have endured nearly a decade of falling real wages (PA)

British workers only need to compare their payslips with their bills to understand that the fruits of economic growth in this country are not being shared.

Throughout much of the expansion of the British economy since the financial crisis (it started go grow beyond the pre financial crisis high in 2013) wage rises failed to match the level of inflation. That started to change at the end of 2014, but the improvement was not sustained, and having started to fall again last year they remain resolutely underwater.

Corporate profitability? Well that’s a very different story.

According to the Office for National Statistics, it was running at 12.6 per cent for non financial companies in the third quarter of 2017. That compares with 11.4 per cent in the third quarter of 2007. In the aftermath of the financial crisis it fell to a low of 9.3 per cent in the second quarter of 2009, but after that the recovery was quite rapid.

Companies in Britain’s dominant services sector have it even better, with the stats showing that their returns broke through the 19 per cent barrier in the third quarter of last year.

Corporate Britain has been doing very well. So have its executives, at least judging by the High Pay Centre’s annual Fat Cat Day at which the average FTSE 100 CEO has been paid what it takes the average worker a year to make. It usually falls in the first week of the New Year.

But real wages, adjusted for inflation, for those average workers? Down by 4.4 per cent, the TUC says, over the period in question.

Now it’s not just through squeezing their workers that companies have been able to live the high life. The profitability figure I quoted is also affected by how much they choose to invest (not enough), and by the competitive pressures they face. It would suggest that the latter is insufficient. The consumer is taking a hit too.

With corporation tax having also steadily fallen, you could argue that corporate Britain has never had it so good. The economy works wonderfully well for it and it’s clear from these numbers that the scales have tipped too far in its direction.

The TUC is quite right when it says the British worker needs a pay rise. The British consumer also needs a price cut. The British economy, while growing, needs a great deal more investment. The official statistics are a demonstration of how well Britain works for the few and how badly it fails the many.

The imbalances that have created that situation need to be addressed. However, it will probably take a change of Government for that to happen.