If slow growth in productivity is the ‘new normal’, the same will be true for living standards growth.
This is according to the Institute for Fiscal Studies June 2018 report; Living Standards, Poverty and Inequality in the UK.
The report looks at changes in living standards for different groups, income growth and distribution, income poverty and deprivation, poverty of working-age adults in poor health and the impact of the of the National Living Wage (NLW) on living standards.
Key findings include:
- Data indicates little growth in real earnings, and slow average income growth is likely to continue over the next few years.
- Income inequality is substantially higher than it was in the 1960s, but roughly unchanged from the 1990s. Forecasts indicate that inequality is likely to increase in coming years.
- Absolute income poverty has reduced, but relative income poverty has increased for households with children. This is due to higher employment rates and higher housing costs.
- People with longstanding mental health problems more than twice as likely to be in poverty as those without. Read the press release about health, poverty and inequality.
- The introduction of the NLW caused strong wage growth among low-wage employees, but growth in living standards was much weaker due to higher taxes and lower benefit entitlements.