Pay squeeze set to continue for British workers, Resolution Foundation says
PUBLISHED: 08:50 27 December 2017 | UPDATED: 08:50 27 December 2017
Archant Norfolk 2017
Britain’s workers are facing the prospect of another year without a pay rise, a leading economic think tank has warned.
In its latest analysis, the Resolution Foundation (RF) said it was expecting zero growth in real wages over the course of 2018 as a whole.
While the pay squeeze which saw real wages fall back in 2017 is set to come to an end, it said that a “noticeable” year-on-year rise in real pay was not now forecast until December 2018.
Real pay remains £15-a-week below its peak before the global financial crash of 2008 and is not expected to recover to its pre-crisis levels until 2025.
The RF said its gloomy outlook was shared by the public with more than half expecting their pay to remain the same or fall over the next 12 months if they stay in the same job, according to resent data from the Bank of England.
Just one in seven said they were expecting a pay increase, while around a quarter of households expect their financial situation will worsen over the course of the year, roughly the same proportion as those who believe it will get better.
The report does highlight some grounds for optimism with the lowest paid workers set for a 4.3% pay rise in April as the national living wage reaches £7.83.
It said that a “surprisingly large” fall in hours worked this autumn also implied a pick-up in productivity growth in the three months to October, the strongest it has been since the end of 2005, potentially heralding pay rises in the future.
RF director Torsten Bell said: “2017 was a tough year for living standards as the pay squeeze returned.
“The good news is that things will get better next year.
“The bad news is we may only go from backwards to standing still, with prospects for a meaningful pay recovery still out of sight.
“While the public have famously defied recent gloomy economic predictions and continued to spend, public expectations do appear to be moving in line with experts’ pessimistic predictions.
“This pessimism is strongest among those on lower incomes, unsurprisingly given big benefit cuts set to take place.”
A Treasury spokesman said: “We are helping families to earn more and keep more of what they earn. Our national living wage is delivering the fastest pay rise for the lowest earners in 20 years and we are cutting taxes for millions of people.”