Wage growth ‘next to nothing’ since financial crisis
06 September 2016 New data has revealed that average wage growth in the UK has been next to nothing since September 2008, when the global financial crisis hit.
06 September 2016
New data has revealed that average wage growth in the UK has been next to nothing since September 2008, when the global financial crisis hit.
The Independent reported today that figures from recruitment firm Korn Ferry show salaries are up just 0.1% when adjusted for inflation.
Korn Ferry highlighted that while average wages are faring poorly compared with other European countries, the employment rate is higher in the UK. Indeed, this is a trend causing concern among labour lawyers and economists, as it suggests workers are being forced into poor quality jobs in an attempt to keep unemployment figures low.
UK companies are incentivised to cut corners on workers’ rights to stay competitive, creating the so-called “gig” economy in which workers are forced to take on unstable jobs such as zero-hour contracts and bogus “self employed” roles. Thus competition becomes based on a race to the bottom for workers rather than investing in research and development, upskilling staff, or creating higher-quality products and services. This leads to a lag in the productivity of the UK economy – one of the key concerns of economists today, as it lessens the nation’s resilience in global headwinds.
Indeed, the UK’s productivity gap compared with major G7 competitors is now at its widest since records began.
For workers, it means that an employment rate kept artificially high by a boost in so-called “self employment” (for workers who have in fact been misclassified as such) and unstable contracts, leaves them vulnerable to exploitation by employers and struggling to improve their income.
The Institute of Employment Rights believes employment should instead be increased through a process of rising demand. Through collective bargaining, workers can negotiate higher pay rates, providing them with the financial security to spend more on products and services. This creates higher demand for UK businesses, leading them to create new vacancies for workers without sacrificing their pay and conditions.
Our new evidence-based Manifesto for Labour Law leads policymakers and readers through this proposal and others and has already gained the support of the TUC, UNITE, UNISON, GMB, CWU, NUT, FBU, BFAWU and the Labour Party.
