The typical hourly pay for those who are under-40 is currently around a tenth lower than it was before the financial crash in 2008. These findings come from the latest report from the Resolution Foundation which has looked into the average hourly pay of different age groups now and before the financial crash.
For all age groups, pay was down on 2008 with hourly pay down 11% for 22 to 39 year olds, 5% for those in their 50’s and 2% for those in their 60’s. The only area where things have improved is for part-time workers who have seen their earnings return to pre-2008 levels on average.
For the first quarter of 2017, average weekly earnings fell by 0.4% which showcases the impact the rise in inflation is starting to have on take home pay and the amount of money workers have in their pocket for the course of the month.
Although pay has risen over the past nine years, it has only risen between 1% and 1.5% for many public and private sector workers. These low percentage rises are now starting to have little effect on the amount people are taking home per month/year as inflation starts to rise, most recently hitting 2.9% in May.
Economic analyst at the Resolution Foundation, Stephen Clarke, commented on these latest findings; “The pay squeeze made an unwelcome return at the start of 2017 and looks set to stay with us for the rest of the year at least. What’s most worrying is that people’s pay packets still haven’t recovered from the last squeeze when this latest bout of falling pay hit.”
There are more people in work than ever before, with the unemployment level hitting record lows, but pay is becoming an increasingly worrying issue for many economists and money charities. According to the Resolution Foundation, the only positive has been the introduction of the National Living Wage, which is likely to responsible for the positive figures for part-time workers pay.
Despite the fall in take home pay for so many up and down the country, employers are struggling to find the staff they need which is seeing them having to increase wages to attract the staff they desperately need.
A new survey of 400 employers by the Open University has found that 56% of the firms surveyed have had to pay ‘well above market rate’ to attract employees with the appropriate skills to their business. Over the past year, the skills shortage seems to have intensified making it very difficult for businesses to fulfil staff recruitment and fill their vacancies.
The Open University’s survey found that Brexit and the uncertainty surrounding it had made this problem worse for businesses over the last 12 months. They found that those already in work were reluctant to move jobs and some EU nationals are not wanting to take a role in the UK as a result of the lack of clarity over immigration rules once Britain leaves the EU.
All of this is costing businesses more than £2bn a year due to longer recruitment periods, additional recruitment fees and having to hire temporary staff to plug gaps. Part of this cost also comes from businesses having to rise the salaries of the jobs they are advertising with SME’s increasing the job vacancy wage by an average of £4150 and large companies raising it by an average of £5575.
So while workers are struggling with the pay they are taking home every month due to a rise in inflation and small yearly pay rises, businesses are struggling to find the workers they require as a result of a skills shortage and an uncertain economy. Businesses and workers across the country are likely to be wishing for investment and a good Brexit deal which should kick-start the economy to the benefit of many.