UK wage squeeze enters ‘uncharted territory’ in 2013 as earnings growth slows further

JPEarningsTweet.jpgThe UK’s ongoing wage squeeze continues to intensify in 2013, and has “enter[ed] uncharted territory” with the publication of the latest official data on average earnings growth.

This is according to the Resolution Foundation’s James Plunkett. Plunkett tweets that an “#ONS chart [see image] shows wages now falling faster than in depths of crisis.”

Earnings growth has not been lower since 2009

The 2013 slowdown in average earnings growth is ongoing the Office for National Statistics (ONS) reports:

  • Whole-economy average total pay (including bonuses) rose by 0.4% when compared with a year earlier over the three months to March 2013.
  • ONS notes that “the growth rate has not been lower since March to May 2009.”

So why is average earnings growth so weak in 2013…and set to weaken further?



It says:


It is unclear why regular pay growth has weakened so much in recent months. The slowing seems too persistent to be erratic. [...] Some of the slowing may have reflected a weakening in productivity growth since late 2011: sharp movements in productivity growth have tended to be associated with changes in regular pay growth about one year later. And higher labour market participation [particularly among disabled people and older people] may have allowed companies to contain pay growth by more than they otherwise would.

But whatever the reason, the slowdown in earnings growth is bad news for UK workers, and consequently for the UK’s economic recovery.

See also:

  • XpertHR economic commentary June 2013: No silver bullet XpertHR’s economic commentary for June 2013 reports on latest data and expected future trends in a number of key economic indicators of direct relevance to HR professionals and reward specialists, including pay awards and pay forecasts, inflation, economic growth and labour market trends. We also look ahead to this month’s Spending Review, which will sketch out the next wave of public spending cuts.

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