No pay rises for a year... except for those on the living wage

BRITISH workers face another year without a pay rise, experts said last night.

In its latest analysis, the Resolution Foundation think-tank said it expected zero growth in real wages over the next year.

Workers’ real pay is not expected to reach levels seen before the recession until the mid-2020s.

However the report offered a note of optimism for the lowest paid, as it pointed out they are set for a 4.3 per cent pay rise in April as the national living wage increases from £7.50 an hour to £7.83 – further decreasing the gap between Britain’s rich and poor. And the centre-Left think-tank added that there were more jobs for disadvantaged groups such as single parents, older people and the disabled.

While the pay squeeze that saw real wages fall back in 2017 is set to come to an end, the report said that a ‘noticeable’ year-on-year rise in real pay was now not forecast until December 2018.

Real pay remains £15 a week below its peak before the global financial crash of 2008 and is not expected to recover to its pre-crisis levels until 2025.

The Resolution Foundation said its gloomy outlook was shared by the public, with more than half expecting their pay to remain the same or fall over the next 12 months if they stay in the same job, according to recent data from the Bank of england.

Just one in seven said they were expecting a pay increase, while around a quarter of households expect their financial situation will worsen over the course of the year, roughly the same proportion as those who believe it will get better. However the report also said that there had been ‘surprisingly large’ fall in the number of hours worked by employees in the three months to October, but the same amount of output – implying the strongest pick-up in productivity growth since the end of 2005.

‘Recovery still out of sight’

This potentially heralds pay rises in the future. Resolution Foundation director Torsten Bell said: ‘2017 was a tough year for living standards as the pay squeeze returned. The good news is that things will get better next year.

‘The bad news is we may only go from backwards to standing still, with prospects for a meaningful pay recovery still out of sight. While the public have famously defied recent gloomy economic predictions and continued to spend, public expectations do appear to be moving in line with experts’ pessimistic predictions.

‘This pessimism is strongest among those on lower incomes, unsurprisingly given big benefit cuts set to take place.’