The Return of Falling Real Wages
The falling real wages experienced by most UK workers between 2008 and 2014 were followed by modest growth in 2015 and 2016. But it has now reversed back as real wages have once again started to fall. This is courtesy of the post-Brexit rise in price inflation that has occurred, coupled with the persistent 2 percent nominal wage growth norm that seems to have become firmly established in the UK labour market.
In this real wage update, we first consider the most recent wage growth numbers and appraise the Bank of England forecasts. Next we consider what has been happening to real wages for different groups of workers. Then, in the light of the recent employment patterns, we discuss another key feature of the UK labour market, the rise in low wage selfemployment. We end with some conclusions.
12 May 2017 Paper Number CEPRWU006