growth will be sluggish for years into the future, a think tank predicted today, due to slack in the labour market.
Average gross earnings will grow just 1.5 per cent over 2012 as a whole, the Centre for Economics and Business Research (CEBR) predicted, before growing around 2.2 per cent in 2013. Even by 2017 wage growth will only accelerate to three per cent, the CEBR estimates.
“High levels of part-time employment mean that, while unemployment has fallen recently, there is still substantial slack in the labour market,” said CEBR economist Scott Corfe.
“The labour market remains a buyers’ market with little pressure for firms to increase salaries,” Corfe added.
CEBR boss Douglas McWilliams pointed out that strong employment during the recession was partially obtained at the price of pay restraint.
The report hails the £1,100 “record” rise in the personal income tax threshold, coming through next April, giving a £220 boost to disposable incomes that would otherwise have been even further squeezed.