London • UK workers will have to wait until the end of the century to see real wages doubling if the current pace of pay growth continues, according to the Resolution Foundation.
Nominal pay growth has risen by an average of 2.2% since 2014, about half the 4% pace before the financial crisis of 2008, the Resolution Foundation said in a report released yesterday. If the current trend continues, it will be 2099 by the time real wages double, where as before the crisis it took just 29 years.
“Britain is living through a painful pay puzzle,” said Stephen Clarke, a senior economic analyst at the Resolution Foundation. “There are three core factors behind Britain’s pay problems — people wanting more hours or secure work, a diminishing ‘skills tail-wind’ and terrible productivity growth.”
There are 700,000 people in Britain looking to take on more hours and actively searching for work, like the unemployed, the report said. That’s up from 500,000 people before the crisis.
Even low levels of unemployment haven’t forced firms to pay more to attract workers, which is against historical trends, Resolution said. However, that doesn’t signal that there’s no relationship between unemployment and wages anymore. Instead, the trends show that levels of underemployment and insecure work also need to be included in studying labour markets, according to the report.
Meager pay growth has knocked household spending, typically a mainstay of UK economic growth. A separate report yesterday showed retail sales fell 0.2% in September on a like-for-like basis, according to the British Retail Consortium and KPMG. Total sales rose just 0.7%, the slowest growth since October.
Barclaycard said in another report that consumer spending growth slowed in September. Nearly half of UK shoppers said they plan to spend less at Christmas this year than last. — Bloomberg