Weekly wages have increased by just £16 in 14 years when inflation is factored in, according to research from living-standards think tank the Resolution Foundation.
Workers have experienced an “unprecedented” pay squeeze since 2010 with real weekly wage growth of £16 due to two crises and Brexit, the foundation said.
The sum factors in price rises across the time period.
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Slow wage growth
Economic challenges in the form of the financial crisis of the late 2000s and the current cost of living crisis coupled with Brexit’s economic effects have acted to suppress wage growth, it said.
It’s a significant slowdown from the rises seen in the 14 years up to 2010 when wages rose £145 a week. It’s also small when compared to other large economies.
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If wage growth had been at the level of Germany and the US, people would be earning £3,600 more a year, equivalent to £69.23 a week.
While wages have been rising faster than inflation in the past few months they haven’t been high enough to overcome a nearly two-year period where the price of goods was going up more quickly than pay packets.
While the latest official inflation reading showed prices rose 2% and wages rose 6%, price rises fuelled by high energy bills after the invasion of Ukraine had been eroding the benefits of salary increases.
Those high energy costs followed pandemic-era price hikes after lockdowns caused problems in product supply chains. Households have been struggling with high bills particularly since energy bills skyrocketed in the early months of 2022.
Improvements for the lowest-paid
Wages have, however, increased more for the lowest earners as the minimum wage has been raised, the Resolution Foundation said.
Those in traditionally low-paying jobs such as cleaners, bar staff and shop workers have seen their typical hourly pay rise against inflation and is now 20% higher than in 2010. It’s significantly higher than the typical pay growth across the workforce, which is 1.6%, the thinktank said.
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A rise in the minimum wage in 2016 was credited for this.
It’s resulted in hourly wage inequality between low and median earners reaching the lowest level since the mid-1970s.
The minimum wage is now one of the highest in the world, the foundation added.
Employment gains and losses
Gains were also made in the number of people at work in the UK, though it is one of just six countries in the Organisation for Economic Co-operation and Development (OECD) group of nations that has yet to return to its pre-pandemic employment rate.
Of the 38 OECD countries only the UK, Latvia, Iceland, Chile, Colombia and South Africa have fewer people in employment than before the COVID-19 pandemic outbreak.