UK employment set to fall in 2020 despite wages returning to pre-2008 levels, warns think tank
2 min read
Britain’s job boom is set to slow in early 2020, despite inflation-adjusted wages passing 2008 levels for the first time.
According to a Resolution Foundation report, wages were set to increase in the New Year despite slow economic growth.
This would take wages, when adjusted for inflation, past their April 2008 peak for the first time, reversing an 11-year pay downturn.
But it predicted this wage turnaround may not be sustainable as economic uncertainty surrounding Brexit sets to weaken the job market.
The report pointed to a fall in youth employment, a decline in the number of vacancies and a poor employment outlook by businesses as potential warning signs of a stagnating job market.
This gloomy forecast follows a mixed year for the British economy.
2019 saw the UKs weakest GDP growth outside of recessions since the Second World War, but employment levels and pay growth hit a record high.
The employment rate hit a new high of 76.2% at the end of the year, while pay growth peaked at 3.9% in June.
Commenting on the report, Torsten Bell, Chief Executive at the Resolution Foundation, said: “2019 was a bad year for the economy, which looks set to have recorded its weakest GDP growth outside of recessions since the war.
"However, the part of the economy that households really care about – the labour market – defied the economic gloom and delivered record employment and decent pay growth."
He added: “As we look ahead to the new year, the crucial living standards question facing the country is whether the labour market can continue its bullish run into 2020.
“The future is an uncertain land, but our best guess is that 2020 will be very different from the last few years.
“We may well see a welcome return to record pay levels, but a less welcome retreat from record employment, with worrying signs including falling vacancies and rising youth unemployment."
Mr Bell also called on the government to focus on falling business investment in the New Year, adding that this issue “received next to zero discussion during the election campaign”.
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