Real wages face further squeeze: Bank of England

09 February 2017 Real wages, which have already fallen by 10.4% since 2007, are facing further squeezes, according to new projections from the Bank of England.

9 Feb 2017| News

09 February 2017

Real wages, which have already fallen by 10.4% since 2007, are facing further squeezes, according to new projections from the Bank of England.

The average pay settlement will fall to 2.2% in 2017 compared with 2.7% in 2016, according to a survey of 341 firms.

Pay rises of 3-4% – the pre-recession average – are expected to fall “significantly”, and the consumer services sector is predicted to be the hardest hit.

Meanwhile, the report indicated that inflation is expected to see further rises throughout the year, increasing the cost of living.

Businesses also reported that they are unlikely to recruit new staff in the next six months.

The Institute of Employment Rights is calling for the reform of labour law to encourage stronger wages and conditions and improve productivity and skills among the workforce. In our Manifesto for Labour Law, 25 policy recommendations adopted by the Labour Party, we propose reshaping employment law to provide incentives for businesses to invest in training and innovation rather than competing on a race to the bottom. The weakening of employment law has given rise to the diabolical conditions revealed at retailers such as Sports Direct, JD Sports, Amazon, Asos and Boohoo. Such low-skill, low-wage jobs trap people in poverty and leave them dependent on the welfare state.

It is vital that wage inequality is tackled, particularly as the UK prepares to leave the EU. The IER’s recommendations refocus labour law on collectively agreed wages and conditions at sectoral and enterprise levels, while strengthening statutory individual workers’ rights, ensuring all workers are eligible for the same rights from Day One, and improving workers’ access to justice when things go wrong.

Click here to read more about our Manifesto for Labour Law