Library Header Image
LSE Research Online LSE Library Services

The squeeze on real wages - and what it might take to end it

Gregg, P., Machin, Stephen and Fernandez-Salgado, M. (2014) The squeeze on real wages - and what it might take to end it. National Institute Economic Review, 228 (1). R3-R16. ISSN 0027-9501

Full text not available from this repository.
Identification Number: 10.1177/002795011422800102


UK workers have been experiencing unprecedented falls in real wages and living standards. Taking a balanced view of the available data suggests that since 2008 real weekly wages have fallen by around 8 per cent, which amounts to a fall in annual earnings of about £2000 for the typical (median) worker. Three factors are important drivers of these unprecedented real wage falls. First, unemployment has been exerting a larger downward pressure on wages than in previous recessions. Second, low wages and low business investment have created the conditions for an extremely poor productivity record through both the recession and recovery, though this has been good news for jobs. Third, and pre-dating the recession, due to rising inequality the wages of typical British workers are no longer keeping up with productivity gains made in the economy. If sustained increases in real wages are to occur, this requires a return to strong productivity growth and a re-coupling of median wages to productivity.

Item Type: Article
Official URL:
Additional Information: © 2014 National Institute of Economic and Social Research
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
Date Deposited: 21 May 2014 14:15
Last Modified: 20 Sep 2021 03:47

Actions (login required)

View Item View Item