BRITAIN’S recession-hit workers have seen earnings fall for the first time since records began in the 1960s, official figures are expected to show this week.

Economists expect average earnings, including bonuses, in the year to the end of March to fall by at least 1%, partly driven by the crisis in financial services where cash perks have been heavily cut.

However, an increasing number of private and public sector staff outside the City now receive “discretionary pay”, which allows employers to reduce staff salaries during leaner economic times.

Last month official figures showed that average earnings, including bonuses, had increased by 0.1% in the year to the end of February.

HSBC forecasts that the figure for the year to March, which will be published on Wednesday, will show a fall of 1.4%, while Royal Bank of Scotland’s prediction is 1%.

Capital Economics, a consultancy, predicts that average earnings excluding bonuses - which reflect how most workers are paid - will start to fall in December and will remain negative for the whole of 2010, depressing tax revenues.

Some economists view falling earnings as positive, allowing businesses to rebuild battered balance sheets and retain staff they might otherwise have laid off.

Karen Ward, UK economist at HSBC, said: “Because of our flexible labour market, employers are able to cut pay and keep staff - and because the Retail Prices Index [inflation] is negative, you don’t see a squeeze on consumer spending. So you could argue this is an ideal outcome.”

Official unemployment figures, which will also be published on Wednesday, are widely expected to show that the claimant count rose by 82,500 to more than 1.5m during April.

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