Wages may not double until 2099
Between 1945 and 2002 pay packets doubled, on average, every 29 years. But a report from the Resolution Foundation said on current rates of pay growth real wages won’t double again until 2099.
Nominal pay growth has averaged just 2.2% since 2014, down from a pre-crisis average of 4%, according to the analysis.
The think tank said the UK has experienced an almost “unprecedented decade” for pay packets and the country’s “disastrous productivity record” is to blame.
Average weekly earnings currently stand at £489, which is around 3% or £12 below where they were at the beginning of 2008.
“This means that the past 10 years have the dubious distinction of being the worst for pay growth since the mid-19th century,” the report stated.
Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “Britain is living through a painful pay puzzle, where earnings growth remains rooted below 3% even while unemployment has fallen to a 40-year low.
“Understanding the real reasons why pay is performing so badly is one of the biggest challenges we face because, unless we fix it, it could take until the end of the century for real wages to double.
The think tank said there were three core factors behind Britain’s pay problems: people wanting more hours or secure work, a diminishing ‘skills tailwind’, and “terrible productivity growth”.
Clarke said: “While the first trend is now fading, tackling the other two related problems isn’t easy. But that shouldn’t stop policy makers doing everything they can to address them as the strength of all our pay rises in the future will ultimately depend on Britain solving its current pay puzzle.”