UK workers wages TUC
British workers have suffered weak wage growth since the financial crisis, but are things about to change? Reuters

We're at a pivot point on wages in the UK: things are about to get better.

At least, that's according to Bank of England policymaker Ian McCafferty, who keeps voting to raise interest rates.

Hopefully he's right. Britons have been suffering wage pain since 2008 at the height of the financial crisis.

Pay is up by just 0.1% on 2013 for full-time workers.

The Office for National Statistics (ONS) says the median gross weekly earnings for full-time employees were £518 in April 2014, compared to £517 a year before. That was the weakest annual growth since 1997.

The real-terms picture is even worse.

You can't look at pay in isolation, because the value of what you earn is relative to your cost of living – bills, rent, etc. The best measure we have for judging the cost of living is inflation, which measures how much prices are changing. When inflation is taken into account, weekly earnings fell 1.6% over the year in 2014.

Compared to a decade ago, the real terms picture is worse still.

Median weekly earnings were £423 in 2004 for full-time workers. Using the Bank of England's inflation calculator, that would be worth £566 today (assuming 2013 prices). That's 8% below what the current weekly wage is.

Private sector pay is suffering more than public.

Full-time employees saw their weekly pay rise by just 0.7% on average in the private sector. Public workers saw a 1% rise. Both have been well below inflation.

"The gap has closed slightly over the long term, but private sector earnings have remained consistently at around 85% of public sector earnings since 2009," said the ONS.

There's still a huge gender pay gap.

It fell to the lowest level on record, but the gap between men and women in hourly earnings, excluding overtime, for full time employees is still 9.4%. Progress, but there's work to be done.

Things should* pick up soon.

Inflation has come in lower than expected in recent months and is expected to stay well below the Bank of England's 2% target in 2015, which will ease some pressure on wages. The Office for Budget Resposnibility (OBR), the UK's independent fiscal watchdog, said it expects "meaningful" real wage growth to begin again in the same year. It forecasts 2% on average for 2015 and 3.1% in 2016.

But it still doesn't expect real wages to meet their pre-crisis peak within five years. In its downside forecasts, if things are worse than expected, real earnings will still be 7% below their pre-crisis peak in 2017.

*subject to many, many variables and caveats