Tuesday, February 28, 2017

UK Wage Squeeze

UK workers' wages fell an average of 1% a year after 2008 financial crisis putting it well behind global average. The findings are further evidence that real incomes are set to be squeezed this year.

The UK was almost at the very bottom of a national ranking of wage growth compiled by the Trades Union Congress. A study based on data from the International Labour Organisation, shows that average wage growth across 112 countries was 2.3 per cent a year between 2008 and 2015, compared to a median increase of 1.6 per cent. Of all the countries examined by the TUC, only a handful ranked worse than the UK in terms of wage growth, putting it in 103rd place.

The Bank of England reported that employers plan to scale down pay awards this year, despite the expected jump in inflation due to the plunging pound. According to the agents’ latest survey, average pay growth of 2.7 per cent in 2016 is expected to slow sharply to 2.2 per cent in 2017.

Consumer price inflation currently stands at 1.6 per cent and is expected to reach 2.7 per cent by the Bank of England by the end of 2017, largely due to the 12 per cent slump in sterling since last June's Brexit vote.

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