Since the recapitalisation of The Royal Bank of Scotland and LloydsTSB in Autumn 2008, the UK has suffered from a problem of low wages. As the economy contracted, banks began shrinking their balance sheets and HM Government increased its borrowings to support the banking sector, public sector spending has been drastically reduced.

A real consequence of this, is falling living standards. The UK is sometimes known as the “Taiwan of Europe“, referring to the UK’s position as a low wage economy to undertake commerce. However the numbers are not good when it comes to living standards.

One sees the poor are really poor. At least one in five workers in the UK economy earns low pay – too little to live on at £7.47 per hour or less. That is not a living wage. These low wages that mean people are struggling to make ends meet.

Work done by The Resolution Foundation shows how the poor are living.

http://www.resolutionfoundation.org/publications/low-pay-britain-2012/

Then when doing some further investigates from the Office of National Statistics,[http://www.ons.gov.uk/ons/dcp171780_305213.pdf]

we then see wages are down in real terms by 8.5%. So when price of bread (a loaf is about £1.35) and wages increases are virtually nil, then purchasing power is falling, means living standards are falling.

Reading the paper on the IFS website (Institute of Fiscal studies) the highly regarded think tank [http://www.ifs.org.uk/comms/r81.pdf] we now see that poor people are really suffering from the financial crisis that has infected the global economy.

Reading from the Joseph Rowntree Foundation [http://www.jrf.org.uk/publications/cities-growth-and-poverty-evidence-review] we see further evidence of poverty.

In the media we hear about zero hour contracts, where people working for large private companies, have no certainty of a wage unless they are called into work. The low-paid workers within the public sector are hard working people such as school crossing patrol staff or dinner staff or care workers and home carers. In the public sector a carer will typically earn between £9 and 11 per hour, but in the private sector the prevailing rate is much lower, at between £6.50 and £7.50, and therefore below living wage.

What is more serious, is that no one seems to talk about the real consequences of this. The reality is high levels of stress for people on low wages, unable to meet daily expenses of living, such as eating or clothing, or feeding families. Poor diet, buying cheap junk food, meaning poor nutrition, and thus greater susceptibility to illness. This will have an effect on the NHS, and thus an increased burden to the tax payer. Also with a gap between rich and poor, perhaps there is a higher risk of crime and mental well-being. It seems that the most vulnerable suffer when the economy is in poor shape.