Pay squeeze tightens – Resolution Foundation

A continuing squeeze on real pay growth is putting further pressure on the austerity agenda, according to a commentary from the Resolution Foundation. Responding to official data showing that real average earnings fell by 0.6% in the three months to April 2017, Matthew Whittaker of the Foundation points out that the latest figures leave average pay £800 below a 2008 peak.

Given expectations for the next couple of years, he suggests real pay is on course for the weakest decade of growth ‘since the Napoleonic era’. This is not all the fault of rising inflation, as actual (nominal) pay has also slowed in recent months and ‘indeed, pay packets would be shrinking even if inflation was bang on the Bank’s target of 2%’, he suggests.

Stephen Clarke, economic analyst at the Resolution Foundation, said:

‘Britain is in the middle of a pay squeeze that is far deeper than anyone expected. What’s most concerning is that while inflation continues to rise, wage growth is actually weakening and making the household income squeeze even tighter . . . The sharp contrast between our terrible record on pay and strong jobs performance shows that the currency-driven inflation we are experiencing is not feeding through into wage pressures and is simply making us all poorer instead.’