INSTITUTE FOR FISCAL STUDIES FALLS SHORT.

The reporting of the conclusions of a study by the Institute for Fiscal Studies (IFS) seems to be a classic example of leaving things out.

In an analysis carried out at the behest of the BBC, the IFS has apparently said that people's wages are now, on average, 3% below what they were 10 years ago at the start of the financial crisis. The BBC reports that this effectively means that, on average, 'real' annual wages are £800 lower than they were. They add that for people aged between 30 and 39, the fall is even greater, at £2,100 a year or 7.2%.

No doubt many will see this as being a terrible indictment of government policy over the intervening period, presumably this being the intention of the extremely dubious reporting. However, so much information is omitted from the reporting that it's actually impossible to draw any conclusions from them.

There is no mention of the substantial increase in personal tax allowances which has occurred over the same period, nor of the rate of inflation compared with what might have been expected but for the impact of the crisis; for instance, what has been the impact of the multi-year freezing of petrol duty ? There is no mention of the impact of state benefits and other state intervention such as free nursery places and free school meals. There is no explanation as to the meaning of the various terms - are we talking about gross or net wages ?  What does 'real' annual wages mean ? Indeed, what did the study consider and how have the results been arrived at ? What assumptions have been made about wage growth, and other factors, had there not been a financial crisis ?

It is also the case that the study seems to assume that average wages should always rise and that any fall is automatically bad. What about productivity ? What about the effect of falling unemployment and how more people working on the lowest wages may have affected the figures ? Has there been an increase in people choosing to be self-employed which has had an impact on the figures ?

I have not read the report itself, but it's clear that either it's a very limited report or it's reporting by the BBC has been extremely selective and highly questionable. Either way, reports about it should be read with extreme caution and cynicism.