Since Resolution Foundation released its report a few days ago, you may have seen headlines across various news platforms about pay not set to increase in 2016. Most reports are very convoluted and technical, making them difficult to comprehend; but what does it all really mean? Why is this the case?
The bottom line: unless productivity shoots up, it is highly unlikely that UK wages will rise next year.
Think tank Resolution Foundation’s Quarterly Earnings Outlook predicts a pay increase of only one percent in 2016. If productivity is not steady and inflation does not go up faster than expected, then pay will stagnate next year.
What are the factors?
The results of Resolution Foundation’s analysis shows there are indications that low headline inflation, combined with productivity and output not rising quickly enough, seems to have led to employers becoming less generous with how much they pay their workers. Additionally, the fact that the rise in employment has been centred mainly in lower-paid jobs has distorted the average pay growth of the nation. Availability of staff also appears to be an influencing factor.
“2015 marked the long-awaited return of rising real pay, following a six-year squeeze,” said Laura Gardiner, senior policy analyst at Resolution Foundation, “but the recent pay rebound owed much to ultra-low inflation, which we’re unlikely to see again next year.” Gardiner says that if this is the case, then wages in Britain may not return to pre-crash levels until the next decade.
Learn More
If you want to find out more about the findings of the Resolution Foundation’s Quarterly Earnings Outlook, the pay prospects for next year, or about the company in general and its work on living standards, visit their website at https://www.resolutionfoundation.org/ for more information.
