Evidence here, once more from the UK’s TUC (Trades Union Congress) that real wages here fell by 10.4% between 2007 and 2015; in other words, since the financial crisis and recession. This is the worst record in the group of rich OECD countries and roughly the same as Greece.
On the bright side, employment growth has been relatively strong in recent years, although putting the two together suggests that a large proportion of the jobs created pay low wages. This means that job creation is less likely to reduce poverty for those already struggling.
As I have written previously, strong population growth has flattered the GDP growth figures so that per capita growth in incomes and output has been poor since the recession.
Stagnant or falling wages should boost the profits of firms, at least for a while, which could feed through into rising investment, which is necessary for productivity growth. But if real wages do not at some point pick up, then the only way that consumption can grow is for people to take on more debt, which will eventually prove unsustainable, especially from today’s already high levels.
Of course, the government will put a positive spin on the figures by distracting from them with the employment figures and overall GDP growth rather than the per capita evidence. But the picture is clear. We have a lot of ground to make up on productivity and real wages compared with our fellow OECD members and it is these variables which play a big role in determining living standards.