Paying the price: Wage data highlights challenges for UK business

If you are covering data on UK wages released this week by the ONS, as well as the recent analysis of executive pay, please see the following commentary from head of investment at Quilter Investors, Anthony Gillham:

“This week has seen the UK post some troubling pay figures. Wage rises remain stubbornly low despite an extremely tight labour market. Historically, wages and employment levels have been very closely interlinked – fewer people out of work normally forces employers to increase pay offers to attract and retain the right staff when labour supply is short.

“But that isn’t really happening at the moment and pay growth has been sluggish, suggesting significant structural changes in the labour market are having a stifling effect. While the growth in flexible working arrangements - broadly termed the ‘gig’ economy - has created efficiencies for employers, helping run tighter working schedules, it has taken away some of the collective bargaining power of employees. A more fluid labour market, particularly for lower skilled work, results in a situation where workers are less able to negotiate for higher pay.

“While average wage increases have been underwhelming, executive remuneration packages are growing more rapidly, illustrated by yesterday’s report on executive pay. This disparity can present economic challenges beyond the social friction that can result from this apparent unfairness. Top level pay is far more likely to be retained as capital savings, rather than re-circulated in the economy through spending. And excessive CEO pay, especially where it is only tenuously linked to performance, can stifle competition and encourage complacency.

“Meaningful wage rises throughout the corporate ladder, rather than just at the top, would help to stimulate positive inflation and boost demand & consumption.

“It is also troubling that underemployment levels are approaching levels last seen during the crisis. Underemployment measures the number of workers that want more hours but can’t find them. High underemployment quashes productivity growth, with workers looking to put in more hours but finding a market without the capacity to support that increase in output.

Source: Office for National Statistics, Labour Force Survey

“Likewise, compared to the US, for instance, UK workers appear less confident in their future employment prospects. One indicator which provides a useful projection of confidence is the rate at which employees are quitting jobs, betting on themselves to find new and better opportunities. The US ‘JOLTS’ survey illustrating labour turnover shows that the rate of quits has been accelerating as workers gain confidence, an effect which is absent in the UK.”

Source: US Bureau of Labour Statistics, Job Openings and Labour Turnover Survey (Quits Rate)



For more information or to speak with Anthony please contact Mike Glenister on 0207 7789 638 or 07469 144 535.

About Quilter Investors:

Quilter Investors is a leading multi-asset investment management business providing portfolio solutions to clients in the UK and internationally.

It manages portfolio solutions including Cirilium, Creation, Compass and Generation.

It is one of the fastest growing multi-asset investment businesses in the UK and oversees £18.4bn of client investments (as at 30 June 2018).

Quilter Investors is part of Quilter plc, the leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.


The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

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