BRITAIN’S productivity crisis—in which output per hour worked fell for six years after the financial crisis—has not stopped wage growth from surging to 2.9% this year. That is good news for Britain’s workers. But, as in America, it would be a mistake to think that this situation is normal. A gap has long existed between productivity and real wages. It has usually gone the other way though; median hourly pay growth typically lags increases in productivity. Data from the Resolution Foundation, a think-tank, shows that whilst productivity has risen by over 60% in Britain since the late 1980s, median pay has grown by less than 40%. Britain's workers have been getting ever more productive, but have not been reaping the gains from their greater efficiency.
What is to blame for this? Gavin Kelly of the Resolution Foundation argues that the rising importance of “non-wage compensation” is largely to blame. With a fixed labour share of national income, an increase in non-wage compensation (such as pension contributions and payroll taxes) reduces the amount paid in wages. By some estimates, almost half of Britain's “pay...Continue reading
from Economics http://ift.tt/1iNviIp
via IFTTT
No comments:
Post a Comment