Research from the living-standards thinktank, the Resolution Foundation, has revealed that weekly wages in the UK have only increased by £16 in the past 14 years when factoring in inflation. This is a significant slowdown compared to the £145 weekly wage growth seen in the 14 years leading up to 2010.
According to the foundation, this stagnation can be attributed to a combination of economic challenges, including the financial crisis of the late 2000s, the current cost of living crisis, and the effects of Brexit. In comparison to other major economies, the UK’s wage growth has been significantly lower. If wage growth had matched that of Germany and the US, workers would be earning an additional £3,600 per year, equivalent to £69.23 per week.
While there has been a recent uptick in wage growth, it has not been enough to overcome the nearly two-year period where the cost of goods was rising at a faster rate than wages. This was further exacerbated by high energy bills following the invasion of Ukraine and pandemic-related disruptions in product supply chains.
The lowest-paid workers, however, have seen their wages increase at a higher rate due to the raising of the minimum wage. This has resulted in a 20% increase in hourly pay for traditionally low-paying jobs such as cleaners, bar staff, and shop workers since 2010. In fact, this rise in the minimum wage has contributed to a decrease in hourly wage inequality between low and median earners, reaching its lowest level since the mid-1970s. The Resolution Foundation notes that the UK now has one of the highest minimum wages in the world.
There have also been gains in the number of people employed in the UK, but the country still lags behind other OECD countries in terms of its pre-pandemic employment rate. Only six out of 38 OECD countries, including the UK, have yet to return to their pre-pandemic employment levels. This highlights the need for continued efforts to support job growth and recovery in the UK.
