1. Money matters
December 29, 2017updated 02 Jan 2018 8:36am

How wages will grow in OECD countries in 2018: UK, Spain, and Italy set for negative wage growth

By Billy

Hungary is expected to come top for real wage growth amongst 32 Organisation for Economic Co-operation and Development (OECD) wealthy nations next year with pay set to accelerate by 4.9 percent.

The eurozone is forecast to see growth in earnings of 0.6 percent though the UK, Italy, and Spain are expected to record negative wage growth with 0.7 percent, 0.6 percent and 0.1 percent respectively.

The UK will come bottom of the 32 OECD countries, according to analysis of the OECD figures by the UK umbrella union the TUC, when taking account of inflation — which has surged in the past year as a result of the pound’s weakness since the country’s vote to quit the European Union in its 2016 referendum, pushing up the cost of importing food and fuel.

Other OECD countries expected to see the strongest rise in wages include Latvia (4.1 percent), Poland (3.8 percent) and Czech Republic (3.7 percent).

Germany, France, and the US will all see wages tick up slightly by around one percent.

TUC general secretary Frances O’Grady will warn in her new year message that 2018 will be another tough year for living standards in the UK.

She is expected to say:

Real wages are still lower than they were when the financial crisis hit in 2008. And 2018 is set to be bleaker still. It looks like UK wages will fall the furthest of all advanced economies. On current projections, average pay won’t recover until 2025 — a full 17 years after the pay squeeze began. So in 2018, we’ll keep campaigning for an economy that can deliver a pay rise.

Meanwhile, research group the Resolution Foundation has said it expects real wages in the UK to stagnate throughout 2018 — forecasting growth in earnings to be zero.