The day Lehman Brothers filed for bankruptcy was the day the worst economic crisis in living memory began in earnest. The Lehman collapse triggered a domino effect that led to millions across the globe losing their jobs and witness all their savings wiped out.
The number of long-term unemployed in the world’s major economies has increased by 85% since the 2008 financial crash. Unemployment is one of the key measures of inequality along with wages, which in most countries have declined on average in relation to inflation. The real wages have fallen by more in any comparable five-year period in developed countries since 2008.
More than 16 million people have been out of work for at least a year in the first quarter of 2014, up from 8.7 million before the crisis, or more than one in three of all unemployed across the OECD that has 34 member countries. Almost 45 million people are without work in the OECD area, 11.9 million more than just before the crisis.
Workers in Europe have seen the biggest squeeze in real pay in decades. Following is an illustration of how average wages have fallen across Euro area.
According to the projections, the OECD member nations’ annual average contribution to global GDP growth will steadily fall from 1.19% this decade to 0.54% between 2050 and 2060. Meanwhile, pay inequality in these countries may rise as much as 30% or more.
If wage stagnation is the new norm, one should consider ways to save more and grow their savings in order to meet their financial and retirement goals. To know more on the various options of regular savings, contact Dino Zavagno’s team at Gladstone Morgan. Our consultants will advise on the many schemes available and will illustrate those that are most suitable for each client’s personal financial requirement.
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