Immigrants, pensioners and benefit cuts will transform the U.K. workforce over the next two years, keeping real wages low even as the economy improves, a forecasting group said on Monday.
EY (Ernst and Young)'s ITEM Club, which studies the U.K. economy, said Britain's labor supply — the number of people available to work — would be one-million-workers larger by 2015.
This is in large part because 400,000 older people will remain in work due to the phasing out of the default retirement age of 65, the group said.
The extra people in the jobs market mean that real wages will remain low, despite the U.K.'s economic recovery and "competition for talent" on the part of employers.
"It is hard to find another episode where employment has been rising and real wages falling for any significant period of time," said Peter Spencer, the ITEM Club's chief economic adviser, in a report.