Wage growth lower than in 1997

An interesting article released by the Guardian today shows that if we compare run-ups to a general election, real wage growth is currently lower than it was in 1997. Based on an analysis by Public First of Bank of England and Office of National Statistic data, it shows strong wage growth was present in the years ahead of the 1997 landslide election when Tony Blair's Labour government came to power (2.6% that election year) and now a forecast this year of 0.1% in wage growth from the Office of Budget Responsibility.

What does this mean for my pay?

• It could be harder to get a pay raise - when economies struggle with low wage growth it can make it harder for employees to move into higher-paying roles, negotiate a salary rise or secure a promotion. If the economy is struggling, then the budget of your organisation is likely to be feeling the impact.
• It could be harder to get training and skills development in order to progress - we know from an analysis from the Institute of Fiscal Studies that companies have been reducing their training days (by 19%) and spend (by 27%). This combined with lower wage growth could mean it is harder to advance or prepare for your next career move.
• If you are in a lower-paid role, you might experience confidence and motivational barriers doubting your ability to succeed in a higher-paying role, which could lead you to stay in a role when you could progress.

What can I do to support my career progression during low wage growth?

It is not all doom and gloom. An article from the Financial Times, shows that a slowing UK job market is actually a sign that inflation is easing. This means this could be an indicator that the economic pressures on the UK (including low wage growth) are reducing.

What would I recommend:

• Keep flexible - if you want to progress your career and have financial pressures, look at jobs that allow a pay increase and are relevant to your current job or ideal career path.
• Keep communicating - if you want to stay with your employer but want to progress, you can still let your current employer know that you are looking to further your career. Any experienced Learning professional would let you know the majority of training happens on-the-job. If your line manager can find opportunities to grow, let them know you're interested in gaining more skills if you feel comfortable to.
• Keep positive - if your company's budget pressures and the job market are preventing you from progressing in your career or pay, don't internalise these external factors. There is always an opportunity for career progression, it might just be delayed or you might have to think in a new way to achieve it and that's okay. Look at your next dream step up, identify what you don't have and start thinking of ways to develop.

Other employment and wage trends:

• Although the redundancy rate has been on a slow rise, unemployment has fallen, is predicted to remain around 60-60.2% and claimant count data is currently staying flat (4).

Sources:

Stacey, K. (2024, March 18). Labour landslide will be much harder to achieve than in 1997, analysis shows. The Guardian. https://www.theguardian.com/politics/2024/mar/18/labour-landslide-will-be-much-harder-to-achieve-than-in-1997-analysis-shows

Even if he enjoys a 1997-like victory, Starmer’s Britain is a dramatically different place to Blair’s Britain - Public First. (2024, March 16). Public First. https://www.publicfirst.co.uk/6052-2.html

Tahir, I. (2023). Investment in training and skills. In Institute for Fiscal Studies. https://ifs.org.uk/publications/investment-training-and-skills

Supporting progression out of low pay: a call to action. (2021, June 28). GOV.UK . https://www.gov.uk/government/publications/supporting-progression-out-of-low-pay-a-call-to-action/supporting-progression-out-of-low-pay-a-call-to-action

UK jobs market slows in sign inflation pressures are easing. (n.d.). Financial Times. https://www.ft.com/content/f58e5343-cd2a-4125-87a0-61c47e3a7012

(4) Office for Budget Responsibility. (2024, March 11). Economic and fiscal outlook – March 2024 - Office for Budget Responsibility. https://obr.uk/efo/economic-and-fiscal-outlook-march-2024/