Real wages are rising - if you've got a career not a job

A report from the Resolution Foundation suggests that pay is on the up at last - but only for those who have stayed in full-time jobs.

by Andrew Saunders
Last Updated: 05 Jan 2015

Workers in full-time employment actually enjoyed a pay rise of 0.1% for the first half of this year, says independent think tank The Resolution Foundation. Alright it’s not much, but it is better than the 0.8% fall recorded by the official ONS figures.

The disparity is down to flawed assumptions, says the report. The ONS measure of wage growth is unduly pessimistic because it fails to take into account the rise in low-paid (and typically low-skilled) part-time employment. Adjusted for this, wages for those in full-time work actually grew slightly. The level of qualifications held by those full-timers is also apparently rising, adding pressure to the upward pay trend.

It’s an interesting finding, not least because it sheds some light on why consumer confidence is climbing despite the string of gloomy claims about broader wage stagnation. It also seems to suggest that getting on the career ladder is more important than ever, especially for young people. For those lucky/talented/hard-working enough to land themselves a decent job and stick at it, career progression is alive and well it seems.

On the other hand, sceptics might say that it’s putting rather a rosy tint on the situation, not least because much of the oft-lamented rise in low-paid part-time work has been amongst those aged 20-29, exactly the age at which career paths - and the better pay and prospects that go with them - should be getting under way.

And if you have spent the past three or four years running up debts to acquire a university degree, landing a job in the ‘growth industries’ of shelf-stacking or office-cleaning cannot seem like a smart career choice. But at least the UK economy is flexible enough to create some work: even if it is not of the most edifiying variety, a job is better than no job, isn’t it? Twentysomethings in, for example, Portugal, Italy and Greece, with their sky-high youth unemployment levels, would probably agree.

So the $64,000 question seems to be whether those low-paid, low-skilled jobs will act as a launch pad into the market for better-quality employment or not. It’s too soon to say, but here at MT we try to adopt a glass-half-full attitude to life and so we hope very much that the answer is ‘yes’.

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