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Home > News > UK to sink...

UK to sink to the bottom of OECD wage growth index in 2018

British workers to be worse off among wealthy nations as Brexit inflation diminishes pay, TUC analysis show

Britain is set to have the worst wage growth of any wealthy nation next year, ranking behind Italy, Greece and Hungary, according to analysis by the TUC.

The UK is forecast to come bottom from 32 Organisation for Economic Co-operation and Development wealthy nations for wage performance in 2018, according to the study of OECD figures by the unions’ umbrella group.

British workers are expected to see their earnings decrease by 0.7% in 2018 when taking account of inflation, which has surged in the past year as a result of the pound’s weakness since the EU referendum, pushing up the cost of importing food and fuel.

Only two other OECD nations – Spain and Italy – are expected to record negative wage growth, although both still outperform the UK.

In contrast, Hungary is expected to come top for real wage growth next year, with pay set to accelerate by 4.9%. The eurozone is forecast to see growth in earnings of 0.6%.

In her new year message for 2018, ahead of the TUC’s 150th anniversary in June, general secretary Frances O’Grady said: “Real wages are still lower than they were when the financial crisis hit in 2008. And 2018 is set to be bleaker still.”

The analysis comes after the Resolution Foundation said this week it expects real wages in Britain to stagnate throughout 2018. The thinktank forecast growth in earnings to be zero over the course of the year, meaning the pressure on living standards is set to continue.

Average weekly earnings have lagged behind inflation for eight months straight this year, despite a recent slight pick-up in wage growth. The annual increase in the three months to October was 2.3%, while the most recent rate of inflation in the year to November was 3.1%.

Taken over the past decade since the financial crisis, pay has failed to grow above inflation and has not yet returned to the average levels seen in the years before the credit crunch. O’Grady said that on current projections, average wages will not recover until 2025 – a full 17 years after the pay squeeze began.

Meanwhile, business trade body the CBI warned the government it must move at speed to secure a transitional deal with Brussels to smooth the exit from the EU.

The head of the CBI, Carolyn Fairbairn, said failure to reach a deal by the end of March would jeopardise jobs and investment. She said companies had put their plans on hold amid political uncertainty, while firms in other nations had moved ahead with major infrastructure projects and adapting to digital technology.

Writing in her end of year letter to more than 190,000 members, she appeared to criticise cabinet infighting over Brexit. “From our politicians we need unity, clarity and certainty, not a different opinion every day,” she said.

 

Source: The Guardian

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