The shift in employment from higher to lower paying industries, combined with rising levels of under-employment have helped push earnings growth to a record low, according to a new report published today (Thursday) by the TUC.

The TUC-commissioned report examines why average weekly earnings growth – a measure of pay growth published every month by the Office for National Statistics (ONS) – is so low when most pay settlements are keeping touch with inflation.

Last month average weekly earnings growth (excluding bonuses) fell to 0.6 per cent – its lowest level since records began in 2000 – despite employment rising by 167,000 over the same period. Median pay settlements are currently around 2.5 per cent – below their pre-recession level of between 3 to 3.5 per cent.

The report, written for the TUC by Incomes Data Services (IDS), identifies several reasons for the dramatic falls in average weekly earnings growth across the UK:

· The changing composition of the labour market, with low-paying sectors creating far more jobs than high-paying ones. High-paying industries such as finance and construction have both shed jobs over the last five years.