Real wages will continue to fall in 2018, warns TUC

Real wages are set to fall again in 2018 - leaving the UK bottom of the league for pay growth compared to other countries, a new study predicts.

The TUC says 2018 will be another tough year for living standards
The TUC says 2018 will be another tough year for living standards

The TUC said 2018 was set to be “bleaker” than in previous years, which have seen wages fail to keep up with the pace of inflation.

Pay is expected to fall by 0.7 per cent after inflation is taken into account, compared to an increase of 4.9 per cent in Hungary, 4.1 per cent in Latvia and around 1 per cent in Germany, France and the United States, according to a TUC analysis of OECD forecasts.

TUC general secretary Frances O’Grady will warn in her message marking the beginning of 2018 - a year that sees the TUC celebrate its 150th anniversary - that the next 12 months will be another tough year for living standards.

She will say: “Real wages are still lower than they were when the financial crisis hit in 2008. And 2018 is set to be bleaker still.

“It looks like UK wages will fall the furthest of all advanced economies. On current projections, average pay won’t recover until 2025 – a full 17 years after the pay squeeze began. So in 2018, we’ll keep campaigning for an economy that can deliver a pay rise for everyone. “We’ll push to stop the worst exploitation, like zero-hours contracts and the pay penalty for agency workers.

“We’ll argue for more and better jobs, in every region and nation of the UK. And on May 12 we’ll march together to demand a new deal for working people.”

Labour MSP James Kelly said: “These are deeply troubling figures that reveal the personal cost of Tory and SNP austerity. It is unacceptable real wages will fall yet again – leaving families poorer and workers in poverty. Scotland deserves a pay rise. Labour would end the pay cap and properly fund a pay rise for our public sector workers – and we would end austerity and boost growth with a proper industrial strategy for Scotland.”

A Scottish Government spokesman blamed the fall on the UK government’s “adherence to austerity”.

He said: “We continue to do what we can to mitigate austerity’s worst effects, but the continued and sustained real terms reductions in our budget makes this increasingly difficult. Brexit also casts a shadow over our economy – and an extreme Brexit poses a serious threat to jobs, investment and living standards.

“We’re working hard to encourage more businesses to recognise the benefits of paying the Real Living Wage, with Scotland having the highest proportion of employees paid at least the Real Living Wage of all four UK countries.”

He said Scotland would become the only part of the UK to lift the public sector pay gap.