10 Years After

The world is still in recovery mode fully ten years after the financial crisis of 2008-09. Inflation-adjusted wages grew by an average of 27% in the decade before the crisis in the OECD, a club of mostly rich countries. In the ten years since, real wages have increased by just 8.4%, on average. Ten OECD countries experienced real-wage growth of 30% or more in the ten years to 2007. And in the ten years since, just one OECD member, Lithuania has enjoyed such heady growth. By contrast, real wages have fallen by a fifth in Greece, a country that is still saddled with enormous government debt.

Surprisingly, Britain is one the OECD’s worst performers over the past decade (more details: https://www.economist.com/britain/2018/09/08/britains-unemployment-is-ultra-low-but-its-wages-are-ultra-measly ) and at 4%, its unemployment rate is at its lowest level since 1975. A 4% unemployment rate in 1980s Britain would have been associated with a 5% rise in wages. Today wage growth is a weaker 2.9%.

Britain is not the exception. Policymakers in America and Germany alike have noted that their low unemployment rates are not yielding significant wage rises for workers.