Domesday Live

Why haven't wages risen?

In pounds, wages have risen, but after prices are taken out, pay is barely higher than before the 2008 crash. That is mainly because the economy has produced little more per hour worked, so there has been little extra to share. A burst of inflation in 2022 and 2023 also took back recent gains.

Why it happens

• Weak productivity. Pay can only rise sustainably as fast as output per hour worked. With productivity growth slow since 2008, so has been real pay.
• Inflation took it back. In 2022 and 2023, prices rose faster than pay, so most people were worse off in real terms for a time. Pay is now rising faster than prices again.
• Public and private sector differences. Pay in the public sector was held down by pay freezes in the 2010s, and then rose in recent years to catch up.
• Rising costs take more of pay. Pay can look healthier than it feels when rent, mortgage and energy take a bigger share of it.