Another seven-year wait for real wages to hit 2008 level
AVERAGE real wages will not return to their pre-crisis peak for another seven years, despite the recent economic upturn, according to a new forecast today.
PwC says the effect of stagnant wage growth and above target inflation means real earnings will sit below 2008 levels until 2020, 12 years after the crisis. The group added that four fifths of the net increase in employment since the onset of recession has been in relatively low-paid sectors.
“The sharp decline in real wages reflects a number of factors, including falling productivity, the rise in VAT in January 2011 and rising import prices,” said PwC’s John Hawksworth.
The research also notes that people with the lowest 10 per cent of incomes have seen consumer prices inflate by 40 per cent in the past decade. In comparison, the 10 per cent with the highest incomes have seen 32 per cent inflation during the same period.