‘Bottom of the pay league’ – How the UK’s wage forecast compares to other developed nations

Two shoppers wearing facemasks in a supermarket in East London, during the easing of lockdown restrictions in England. Picture date: Sunday July 4, 2021.
The TUC has warned Brits are "brutally exposed" to the cost-of-living crisis due to wage stagnation. (PA)

Workers in the UK are set for the worst “real wage squeeze” among leading economic nations, according to a new report.

Research by the Trade Union Congress (TUC) suggests real wages in the UK are forecast to shrink by 6.2%, or £1,750 on average, over the next two years - higher than any other G7 economy.

UK workers will suffer the longest and harshest pay squeeze in modern history, the report said, with pay growth bouncing back faster in other G7 countries.

Wage stagnation has left families “brutally exposed” to Britain’s cost-of-living crisis, according to the report's authors.

Read more: Inflation: A quarter of UK firms expecting to raise prices

Forecast real wage growth by 2023. (TUC analysis of OECD Economic Outlook Statistics)

“Making ends meet shouldn’t be a battle, but UK workers are suffering the worst pay squeeze in the G7 and the longest in modern history," said TUC general secretary, Frances O’Grady.

“Having repeatedly promised a high-wage economy, the Conservatives have consigned Britain to the bottom of the league for pay growth."

The TUC's analysis comes as growing number of public sectors workers call for pay rises amid the highest inflation for 40 years - with rail workers holding the biggest strikes in a generation in June.

On Thursday, trade union Aslef announced its train drivers at eight rail companies will strike on 30 July in a dispute over pay.

"We don't want to go on strike - strikes are the result of a failure of negotiation - and this union, since I was elected general secretary in 2011, has only ever been on strike, until this year, for a handful of days," said Mick Whelan, Aslef general secretary.

Inflation is soaring past pay growth. (PA)
Inflation is soaring past pay growth. (PA)

Read more: How does inflation in the UK compare to the EU?

"We don't want to inconvenience passengers - not least because our friends and families use public transport, too, and we believe in building trust in the railways in Britain - and we don't want to lose money by going on strike.

"But we've been forced into this position by the train companies, driven by the Tory government."

Other industries, including Royal Mail and some British Airways staff, have also voted to strike this summer over pay.

Why is the UK’s wage growth so bad?

Previous analysis by the TUC indicated that workers lost nearly £20,000 in real earnings between 2008 and 2021 as a result of pay not keeping pace with inflation.

And in June, the Office for National Statistics (ONS) said annual growth in regular pay fell by 4.5% in April after adjusting for inflation (excluding bonuses) – the biggest fall since comparable records began.

On Thursday, Resolution Foundation said the UK's "toxic combination of low growth and high inequality" has left it trailing behind comparable economies with "disastrous consequences for low- and middle-income households."

"Britain is a rich country, with huge economic and cultural strengths. But those strengths are not being built on with the recent record of low growth leaving Britain trailing behind its peers," said chief executive, Torsten Bell.

File photo dated 13/12/2016 of a flag on an Aslef picket line. Train drivers at eight rail companies are to stage a 24-hour Saturday strike later this month in pay disputes, threatening more disruption to services. Members of Aslef at Arriva Rail London, Chiltern Railways, Greater Anglia, Great Western, Hull Trains, LNER, Southeastern and West Midlands Trains will walk out on July 30. Issue date: Thursday July 14, 2022.
Train drivers at eight rail companies are to stage a 24-hour Saturday strike later this month in pay disputes. (PA)

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"This forms a toxic combination with the UK’s high inequality, leaving low- and middle-income households far poorer than their counterparts in similar countries.

“We must turn this around, but we are not on track to do so.

"We underestimate the scale of our relative decline and are far from serious about the nature of our economy or the scale of change required to make a difference. This has to change.”

The warnings come after the Organisation for Economic Co-operation and Development (OECD) in June said that the UK is second only to Russia when it comes to the worst growth in the G20.

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