Rising pay but fewer jobs in 2020, think tank predicts

THE pay downturn caused by the 2008 financial crisis will end next year, Resolution Foundation analysis shows.

The think tank’s research has forecasted an end to the UK’S unprecedented 11-year pay squeeze.

However, there are warnings that unemployment levels may rise, thanks to low productivity and GDP levels.

Torsten Bell, the chief executive of the foundation, said: “The future is an uncertain land, but our best guess is that 2020 will be very different from the last few years.

“We may well see a welcome return to record pay levels, but a less welcome retreat from record employment, with worrying signs including falling vacancies and rising youth unemployment.”

The report notes that 2019 was a good year for the labour market. Despite the UK’S low GDP growth of 1 per cent, there were record employment levels of 76.2 per cent. Nominal pay growth peaked in June at 3.9 per cent, with pay set to rise further in 2020.

However, after analysing key economic data – including economic growth, vacancies, the exchange rate and productivity – in a statistical model, the foundation is predicting falling employment next year.

Mr Bell said: “Policymakers focus on the underlying problem – an economy growing slowly because businesses aren’t investing. This received next to zero discussion during the election campaign, but putting it centre stage should be a New Year’s resolution for all of us.”

The report points to falling rates of business employment intentions. The Recruitment and Employment Confederation, which represents recruitment agencies, saw hiring intentions fall in 2019. Hiring confidence dropped to a net level of minus eight between September and November, the lowest level since the survey started in 2016.

The youth job market – which tends to follow the economic cycle more than other groups – also looks to be in trouble. Unemployment among 18-24-yearolds has been rising in 2019, while productivity growth has averaged just 0.3 per cent since 2008.