Wage controversies: real wage stagnation, inequality and labour market institutions

Weak real wage growth, low wage work and higher wage inequality than the past are features of contemporary labour markets the world over. Longstanding wage controversies in economics are of relevance to them. This paper studies what has happened to wages in the British labour market over the past sixty years, connecting the observed trends to some of these wage controversies. The focus is on the role of labour market institutions for wage inequality, real wage stagnation and shifting wage norms. Given that UK real wages have stagnated for the longest duration of the past two centuries, and inequality remains high, the paper concludes with discussion of where inclusive real wage growth can come from to boost workers’ living standards as it did in the past.