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Trends hitting wage growth: Study

Wages have been "dragged down" this year because of changing trends in the workforce, including younger and less experienced employees, according to a new study.

The Resolution Foundation think tank said a downward shift in the mix of occupations towards lower-paying jobs has prevented 2014 from being the year of the pay rise.

Changes which have led to reduced earnings growth include fewer managerial jobs, rising youth employment and increasing numbers of people starting a job, research found.

Matthew Whittaker, chief economist at the Resolution Foundation, said: "Many people predicted that 2014 would be the year of the pay rise.

"In fact, earnings growth reached a record low earlier this year and is not set to overtake inflation until 2015. This stubbornness of pay falls is a worry to all of us.

"We are beginning to get a clearer picture of what underpins these terrible wage figures. Some factors are more benign while others are a cause for concern.

"The speed-up in the entry of younger and less experienced employees into the workforce, who are invariably lower paid than average, has been an important drag on wages.

"What's more worrying, however, is how the mix of occupations - particularly the decline in managerial roles and the rise of low-skilled occupations - is dragging down wage growth.

"It's not yet clear whether this is a temporary blip or the start of a new shift in patterns of UK employment.

"We shouldn't forget that underlying pay growth within different sectors and groups of workers remains very subdued despite the reports of strong growth in some firms.

"Ultimately the prospects for pay rest on employers' willingness and ability to reintroduce above-inflation pay increases.

"If the recent minimum wage rise of 3% can set a benchmark, then there are reasons to be optimistic that 2015 could finally be the year of the pay rise."

Downward pressures on wages should ease next year, opening the way for "long overdue" growth, the report added.

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