Understanding Britain's fall in real wages from 2008 – 2014

Between 2008 and 2014 Britain experienced unprecedented falls in real wages. The typical British worker’s weekly earnings adjusted for the cost of living fell by over 10 per cent. Real wage falls affected workers across almost all of the earnings distribution, reflecting not falls in hours or bonuses, but in regular hourly pay.

Previous post-war periods of recession were characterised by rising unemployment therefore the UK’s recent experience challenges conventional economic wisdom about labour market response to recessions.

With the support of Resolution Foundation this project aims to develop knowledge of how the falls in real wages came about, promote a shared understanding of wage evolution in the UK among academics, policy makers and the media and provide insights for the future prospects of the UK labour market.

Using data from Annual Survey of Hours and Earnings, the Quarterly Labour Force Survey and Understanding Society the study will focus on three inter-related research questions:

1.      How have individuals earnings dynamics shifted through the recession and how do local unemployment levels map onto to these wage dynamics?

2.      Are young and lower skilled peoples’ earnings particularly affected due to lack of progression through lack of new job starts?

3.      Are wages becoming more volatile and how does earnings volatility sit alongside hours and job stability?