Real wage and productivity stagnation

Stephen Machin

Oxford Review of Economic Policy, 2025, vol. 41, issue 1, 105-119

Abstract: The UK’s economic performance since the global financial crisis has seen real wage growth stagnating for over fifteen years and weak productivity growth with most, but not all, of the wage stagnation overlapping with the productivity slowdown. This paper studies these stagnation patterns in detail for the UK, and places them in international context where the country does not fare well as it both drops down wage and productivity growth rankings across countries. There has been a longer term decline in the influence of labour market institutions in affecting worker wages as the changing balance of power between workers and employers has played a role in the emerging wedge between wage and productivity growth in the stagnation period. The paper concludes with a policy related discussion of possible sources where sustained wage growth could re-emerge, and thereby generate improvements in living standards, in the future.

Keywords: real wage growth; productivity growth; employer and worker power (search for similar items in EconPapers)
Date: 2025
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