This one chart explains why Britain's wage growth is totally crap

Britain may be enjoying near record-low unemployment levels but wage growth is absolutely terrible.

In other words, lots are people are getting jobs but their pay is stagnant and not rising in line with inflation. It’s such a big issue, the Bank of England is going to continue to keep interest rates at a record low of 0.5% way into 2016.

Basically, because wage packets aren’t increasing at the same rate as things like house prices and food bills, a rise in interest rates could hurt people’s ability to pay for the essentials. Even the latest report by the Royal Institution of Chartered Surveyors (RICS) says that rent and property purchase prices are going to jump over the next five years, no matter what.

And Credit Suisse in its compendium of annual lookahead reports today threw out one chart that shows exactly why Britain’s wage growth is so terrible:

The Office for National Statistics said this month that the unemployment rate was 5.2%. The jobless rate has not been lower since the 3 months to January 2006. While wages have increased year-on-year to £493 a week in October 2015, earnings growth has been weak for months.

However, as Credit Suisse pointed out with this chart above, it seems there the gap between people looking for a job and the actual amount available means employers are able to keep wages low because people are easily replaceable.

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