THE UK is in the “economic relegation zone” as new analysis says British workers face the worst pay prospects in 2018 of any employees in the world’s most advanced economies.
Research for the TUC suggests the New Year offers a bleak prospect on pay with Britain stuck at the bottom of the OECD pay growth league.
It says in the coming year average wages will continue to fall and remain below where they were before the 2008 financial crash. The analysis further predicts that British workers’ take-home pay will not recover until 2025; some 17 years after the UK was hit by the worst economic downturn since the Second World War.
In her New Year message, Frances O’Grady, the TUC’s General Secretary, warns that 2018 will be another tough year for living standards.
“Real wages are still lower than they were when the financial crisis hit in 2008. And 2018 is set to be bleaker still. It looks like UK wages will fall the furthest of all advanced economies.
“On current projections, average pay won’t recover until 2025; a full 17 years after the pay squeeze began,” she will say.
Ms O’Grady insists her organisation will continue in 2018 to campaign for an economy, that “can deliver a pay-rise for everyone”.
She will add: “We’ll push to stop the worst exploitation, like zero- hours contracts and the pay penalty for agency workers. We’ll argue for more and better jobs, in every region and nation of the UK. And on May 12 we’ll march together to demand a new deal for working people.”
The analysis of projected real wage growth among OECD countries puts Hungary with a 4.9 per cent expected rise at the top of the league table. Israel in sixth position is predicted to have wage growth of 3.0 per cent, South Korea in eighth 1.9 per cent, the US in 13th 1.2 per cent, Greece in 27th at 0.2 per cent and the UK bottom in 32nd place with -0.7 per cent.
Sir Vince Cable, the Liberal Democrat leader, declared: “We will be one of the few developed economies to suffer a real wage decrease in 2018. The Conservatives’ mismanagement is putting us in the economic relegation zone.”
He claimed the Tories’ pursuit of a hard Brexit was a “big part” of Britain’s poor wage growth prospects for 2018, saying that Theresa May’s withdrawal strategy was leading to a sustained level of inflation that was “eating into real wages and meaning it will get increasingly difficult for families to make ends meet”.
Another reason, he argued, was a productivity problem that could not be solved when there was such subdued Government investment.
A Scottish Government spokesman also claimed the analysis showed the damage the UK Government’s continued pursuit of austerity was having on people’s wages.
“We continue to do what we can to mitigate austerity’s worst effects but the continued and sustained real terms reductions in our budget makes this increasingly difficult,” he claimed.
“Brexit also casts a shadow over our economy and an extreme Brexit poses a serious threat to jobs, investment and living standards.
“We’re working hard to encourage more businesses to recognise the benefits of paying the Real Living Wage, with Scotland having the highest proportion of employees paid at least the Real Living Wage of all four UK countries.”
The spokesman added: “In addition, Scotland is once again leading by example by being the only part of the UK to lift the one per cent public sector pay cap; a decision that will directly benefit thousands of nurses and other public sector workers across Scotland.”
The TUC analysis follows that, earlier in the week, from the Resolution Foundation, which also suggested the UK could expect zero growth in real wages over the course of 2018 as a whole.
The think-tank said that while the pay squeeze, which saw real wages fall back in 2017, was set to come to an end, it noted how a "noticeable" year-on-year rise in real pay would not materialise until December 2018.
Real pay, it pointed out remained £15-a-week below its peak before the global financial crash of 2008. This works out at almost £800 a year.
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