Why 2014 hasn’t been the year of the pay rise

A downward shift in the mix of occupations across the workforce towards lower-paying cleaning and caring roles, along with a welcome return of younger and less experienced workers to the labour market, has prevented 2014 from being the year of the pay rise, as many economists predicted.

This analysis looks at the impact of changes in the characteristics of the labour market – the so-called ‘compositional effect’ – in order to establish why it has propped up wages throughout most of the downturn and why it is now acting as a drag on wages. The analysis looks at the impact of different factors – such as age, gender, sector, occupation, job tenure, skill level and migration status – to see how they have each affected wage growth.