UK has weakest wage growth in advanced G20 nations, says ILO
Workers in Britain have had the weakest real wage growth among the most advanced nations in the G20, according to UN data showing the scale of the UK’s “lost decade” for pay.
According to the International Labour Organization, Britain ranked bottom of a group of nine wealthy nations for its pay performance since 2009, after the financial crisis.
With a loss in real wage growth – which strips out the effect of inflation – of about 5% between 2008 and 2017, the UK performed slightly worse than Italy and far behind other major G20 nations such as the US and Germany. South Korea had the strongest real wage growth at 15%.
The figures provide an international comparison for the damage to living standards in the UK since the financial crisis, which has been described by Andy Haldane, the chief economist at the Bank of England, as a “lost decade” for workers.
Speaking last month, Haldane said the growth of insecure and poor-quality work in the gig economy had contributed to the bad performance, while the decline of trade unions and sluggish growth in productivity also had an impact.
The ILO figures showed real wage growth in Britain began to recover from the 2008 financial crisis in 2014, although came to an abrupt halt around the time of the Brexit vote in 2016.
Economists blamed the sharp rise in inflation after the EU referendum for the reversal of pay growth, as inflation triggered by the drop in the value of the pound after the Brexit vote outstripped wage rises.
Real wage growth did, however, return earlier this year, as pay rises increased and inflation began to wane. With the lowest level of unemployment since the mid-1970s, growth in workers’ pay has now reached the highest level in almost a decade.
Britain has not been alone in terms of sluggish pay growth, with the ILO data showing real wage growth for workers around the world fell to the slowest rate in almost a decade last year. Pay growth also remained well below its pre-crisis rate.
The average increase in workers’ monthly pay packets after inflation declined to 1.8% in 2017, from 2.4% a year earlier, with some of the worst performances in advanced economies.
Excluding China, global pay growth rose by 1.1% after inflation. Workers in Asia had the strongest increases of any world region over the past decade, while the figures also showed real wages have almost tripled in emerging and developing G20 countries since 1999.
The ILO also examined the gender pay gap in 70 countries that account for as much as 80% of wages worldwide, and it found women earn about 20% less than men on average.
Pakistan had one of the highest gender pay gaps at 34%, while in the Philippines, women earned on average 10.3% more than men.
Britain had one of the highest median gender pay gaps for hourly wages among the biggest economies in the world, ranking third-worst behind South Korea and Estonia with a 20.6% disparity. The ILO also found the UK had a low share of women among the top 1% of earners.
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