Will 2014 be the year of the pay-rise?

After a decade of first wage-stagnation and then wage-slump, some analysts think it won’t be long before real earnings begin to rise again. With inflation back on target and GDP expected to rise this month for the fourth successive quarter, they argue that economic recovery will shortly translate into rising productivity, and with it real wage increases.  Others are less optimistic – suggesting that the labour market has undergone a structural shift in recent times which will delay the point at which productivity and wages start to significantly rise again. Instead, they argue, we should expect a jobs-rich, wage-poor recovery.

What happens to wages over the next year is first and foremost of great concern to hard-hit households. But it is also likely to greatly affect the sustainability of consumption and therefore the recovery, the path of future monetary policy and, indeed, the wider political debate between now and the next election.

This Resolution Foundation event threw light on the question and heard from some of the UK’s leading economists. The event occurs just one week before Resolution Foundation launches its annual state of the nation report on living standards.