UK Wage Growth Slows to 3.9%, Pointing to Higher State Pension Under Triple Lock

British companies continued to cut staff even as wage growth slowed, according to live economic coverage published by The Guardian on 15 September. The publication reported that average earnings growth fell to 3.9%, a figure closely watched because it is one of the three measures used to calculate annual increases to the state pension under the government's "triple lock" policy.

Under the triple lock, the state pension rises each year by whichever is highest of average earnings growth, inflation, or 2.5%. The Guardian's report indicated that the 3.9% wage growth figure could set the rate of the next pension increase, subject to confirmation from other data used in the calculation.

The triple lock has been credited by its supporters with lifting the living standards of the UK's poorest pensioners since it was introduced. However, the policy has faced criticism from those who argue it has proven more costly than originally anticipated and commits the government to raising pension spending annually regardless of wider economic conditions.

According to figures cited in the report, the triple lock has increased annual spending on the state pension by around £16 billion compared with a scenario in which pensions were uprated solely in line with average earnings growth since 2010.

The Office for Budget Responsibility (OBR) has forecast that the triple lock will add a further £600 million per year to state pension spending by 2029–30, compared with a baseline linked purely to earnings growth. The report noted this figure is relatively small when set against total state pension spending, which currently stands at £154 billion per year, but that the policy's design means each increase becomes permanently locked into future spending.

The Guardian's coverage cited estimates suggesting that maintaining the triple lock could, in expectation, cost around £20 billion per year in today's terms by 2050. However, the report stressed considerable uncertainty around this projection, with the true cost potentially ranging anywhere between £5 billion and £40 billion per year, depending on the future paths of inflation and wage growth.

The wage growth slowdown was reported alongside continued job losses at UK companies, as businesses navigate a period of subdued economic conditions. The Guardian's live blog covered these developments as part of broader rolling coverage of economic and financial news, which also touched on grocery inflation and interest rates.