The UK labour market has changed ‘beyond recognition’ since the Conservatives were voted in, with real wages just £16 a week higher than in 2010.
This is according to the Resolution Foundation, which finds that the UK is struggling to recreate the 2010s job market “boom”; the UK is one of only six countries in the OECD which has seen its employment rate fall since 2019, and there has been an uptick in rates of ill health.
Its Job Done report, supported by the Nuffield Foundation, claims that the post-financial crisis wage squeeze and cost-of-living crisis have meant that wages are only 2.5% higher in real terms than at the time of the 2010 general election. Before then, wages were growing at a rate of 2.2% every year.
Real wages since 2010
Majority of employees worried about basic living costs
Had UK wages grown at the same rate as the US or Germany over the past 14 years, the average UK employee would be earning £3,600 more each year.
Hannah Slaughter, senior economist at the Resolution Foundation, said: “Britain’s prolonged pay depression has left average earnings just £16 a week higher than they were back in 2010, despite the welcome return of rising real wages in recent months. Worryingly, Britain’s decade-long jobs boom during the 2010s has also gone bust, with the UK one of only a handful of countries where employment has yet to return to pre-pandemic levels.
“Both the main parties want stronger jobs growth over the next parliament but offer very different approaches to achieving it. The Conservatives want to use carrots and sticks in the tax and benefits system, while Labour is prioritising career, skills and health support.
“The Conservatives’ business-as-usual approach to the minimum wage and employment rights stand in stark contrast to Labour’s plans for the biggest shake-up of the workplace in a generation. But while the big labour market challenges facing Britain offer reasons for bold new policies, the combined scale of these reforms means they should be implemented carefully and after consultation.”
However, the report notes that the Conservative Party deserves credit for boosting pay among the lowest earners. Increases to the national minimum wage and national living wage have meant that between 2011 and 2023 real hourly pay rose by 26% for bar staff, 24% for waiters and 20% for cleaners.
As a result, the ratio between median pay and the bottom tenth percentile is now the lowest since the mid-1970s.
The report says the state of the labour market over the past 14 years has shaped the challenges the next government will need to address, particularly high levels of economic inactivity and no growth in the employment rate.
It concludes: “Whichever party wins the upcoming general election will face common challenges: getting employment growth back on track, tackling rising economic inactivity and reversing long-term wage stagnation.
“But labour market policy under the next government is set to look very different depending on whether that government is a Labour or Conservative one: the election’s outcome will determine whether we see a continuation of the current system, or the biggest overhaul of labour market rights in a generation.”
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