Fallen sprinter. Photo: Williv

UK 103rd out of 112 in global ranking for real wage growth since the crisis

27 Feb 2017, by Geoff Tily in Economics

Over 2008 to 2015, UK real wages fell by 1% a year. This puts the UK 103rd out of 112 countries for wage growth over the post-crisis period, on the basis of International Labour Organisation figures. The average wage growth across all countries was +2.3% a year and the median +1.6%. There were real wage declines in a fifth of the countries – a full table is in an annex below.

Post-crisis real wages, annual average growth

Methodological note

The analysis is based on figures issued by the International Labour Organisation alongside their Global Wage Report, 2016/15 (published on 15 December 2016). The ILO make available annual nominal earnings figures in national currencies and also growth rates in real terms (i.e. adjusted for inflation). The TUC analysis is based on averaging annual real terms figures over the post-crisis period.

For most countries the average is based on figures for 2008-2015, but countries with partial information are also included, so long as a minimum of five annual observations are available over the post-crisis period. The ILO publish figures for 134 countries: 22 countries were omitted altogether from the TUC analysis; 33 are based on a partial sample; and 79 on a full sample.

Plainly even with these omissions figures for some developing countries will be based on data that is not always reliable – but the analysis is aimed at providing broader context for the UK figure.

For what it’s worth, in 2014 the World Bank reported economic growth of 7 per cent in the league leader, Tajikistan, and warned of ‘strong growth and rising risks’, noting also “Real wage growth in excess of productivity growth further deteriorated the country competitiveness”.

It is probably worth also warning more generally that strong outcomes over recent years are no guarantee of strong performances in the future.

World comparison with OECD countries

The process of economic development should normally mean that less advanced countries grow faster than advanced countries. The chart below marks out advanced countries according to OECD membership (in blue). These begin with Poland, ranking some way down at 38th; the majority of OECD countries then are arranged from the middle or 50th percentile to the 90th percentile. While 37 developing countries rank ahead of Poland, many others rank below and are dispersed among the advanced economies. Conversely the very worst performances are also by developing countries, except for poor Greece.

It is hardly a ringing endorsement that the next worst advanced country for wages is the UK (and then Italy).

Post-crisis real wages, annual average growth

In an earlier analysis the TUC found the UK real wage decline matching the Greek decline; this work was based on OECD figures derived using National Accounts data. The figures here are from the ILO global wages database (which uses ASHE for the UK).

In response to our earlier analysis the Treasury reverted to their usual formula of emphasising instead the employment performance. Plenty could and has been said about the quality of work. But the purpose of the earlier analysis was also to make the point that there were a number of OECD countries that had enjoyed both strong employment growth and strong wage growth.

If the government are serious about the post-Brexit economy working for everyone, both decent wages and quality work must be the destination.

ANNEX: Post-crisis real wages, annual average growth