The return of wage squeeze Britain: more than 9.8 million workers expect to miss out on a pay rise in 2020
Nearly one in three of the UK’s 32.8 million workers say they are not expecting a pay rise this year, Scottish Friendly’s research reveals
A further 30% believe their pay will rise by less than 2%, meaning nearly two-thirds of the workforce are potentially facing a pay cut in real terms
More than a third of respondents expect to be worse off financially in 2020 while four in 10 say they plan to make fewer big-ticket purchases
More than 9.8 million [1] UK workers are expecting their wages to stagnate this year as signs of a fresh squeeze on household finances begin to emerge, new figures from Scottish Friendly reveal.
In new research looking at the cost of living in the UK, nearly one in three workers (30%) believe their employer will put a freeze on pay this year just as official data shows the UK economy slipped back in November.
A further 30% believe their pay will rise by less than 2% in 2020. With annual inflation currently running at 1.3%, it means millions of workers could experience a pay cut in real terms in 2020.
If households’ fears become reality, it could result in inflation outstripping wages for the first time since February 2018, which would put a strain on their finances.
Meanwhile, Scottish Friendly’s research suggests households are bracing themselves for a fresh squeeze on living standards by reining in their spending.
Four in 10 (40%) respondents say they plan to make fewer big-ticket purchases this year compared to 2019, such as buying a new car, expensive household appliances or making large-scale home improvements.
Meanwhile, a third (33%) of respondents believe their financial situation will be worse in 2020, despite the Government’s recent long-term pledge to usher in a “decade of prosperity”.
This compares to 42% of those who said they would be able to save roughly the same as last year and the 33% of people who said they would be able to save slightly or significantly more.
Kevin Brown, savings specialist at Scottish Friendly, said:
Household sentiment is an early indicator of how the UK economy is faring, which is why the current pessimistic outlook makes for concerning reading. If households’ fears ring true, then we could be about to experience another painful squeeze on living standards.
After nearly two years of wage growth exceeding inflation, it could be we are at a turning point just as data shows the economy has gone into reverse, which could put greater pressure on household finances.
Understandably, then, many people might not see saving for their future as a key priority. However, just doing something, even if it’s little and often could make a big difference to your finances in the future.