Having recently spoken to BBC Radio 4’s Money Box programme on the subject of what a very prolonged period of economic austerity, akin to the Japanese "lost decade" of the 1990s, might mean for pay packets in this country, I’m left feeling a bit like Mystic Meg. Economists don’t have a clear idea of what the world will look like a year from now, let alone 10 years. But that never stops us from speculating. So, crystal ball at the ready, here goes.

According to the Office for National Statistics, the median annual earnings of full-time employees were £25,879 in April 2010 (roughly £500 a week or £12.50 an hour for an average working week). This was just over £7,000 higher than the corresponding figure for 2000, an increase on the decade of 37 per cent (16 per cent in real terms having adjusted for consumer price inflation (CPI)). Can we expect something similar in the decade to 2020? I very much doubt it.

The 2000s was a decade of mostly strong economic growth, low unemployment and low inflation, which enabled decent improvements in earnings in both nominal and real terms, ruined at the end by a deep and prolonged recession, high unemployment and stubbornly high inflation. At best, the first half of the current decade will witness a continuation of the tougher conditions experienced since the onset of recession. While lean times continue, with high or rising unemployment maintaining downward pressure on pay settlements in the private sector and government clamping down very hard in the public sector, it’s unlikely that average earnings will rise faster than the current rate of around 2 per cent a year.

If this situation were to persist throughout the period to 2020, one might therefore expect to see median annual earnings increase to a little over £30,000. While this would be roughly £5,000 higher in nominal terms than in 2010, it would be unchanged in real terms even if, over the decade, annual CPI inflation averages out in line with the Bank of England’s 2 per cent target rate.

However, my expectation (or at least hope!) is that things will turn out better than this, with the pain of the first half of the decade giving way to some relief in the second half, as the rate of economic growth improves and unemployment starts to fall. Consequently, I expect earnings growth to average around 3 per cent a year for the decade as a whole, enabling median annual earnings to rise to roughly £34,000. This (again assuming CPI inflation averages 2 per cent a year) would represent a rise in median earnings of 10 per cent in real terms.

The outcome would not be anywhere as good as that enjoyed in the 2000s but perhaps not too bad for a decade that will have witnessed the so-called "age of austerity". Even so, what most people will be ultimately concerned about is their real disposable earnings (ie, after tax). We know that the personal tax burden will increase for at least the first half of the decade as part of the government’s plan to eliminate the structural fiscal deficit, so even my reasonably upbeat scenario almost certainly delivers a rise in real disposable earnings of less than 10 per cent.

Moreover, what people actually experience in the coming decade will depend very much on their relative position in the pay league. For example, in the decade to 2010, annual earnings for full-time employees situated at the bottom tenth of the pay distribution increased by 36 per cent to reach £14,000. This was in line with the increase at the median. But the pay of those situated at the top tenth of the distribution increased by 44 per cent (to about £51,620) and rates of increase were much faster still for people higher up the distribution.

It seems likely that this trend will continue, with employers prepared to pay a premium to individuals whose occupational skills or personal abilities (the "X factor") are in high demand relative to the available supply. While even those in the top rank of the pay league might not do as well in this decade as the last, on past experience they will nonetheless fare much better than those further down the pay pecking order. This ought to spark a major political debate about growing pay inequality and the relative tax burden in Britain. But I suspect that, perversely, most outrage will come from those who think that even maintaining the 50 per cent income tax rate for top earners threatens the end of civilisation as we know it. We might, as we're constantly told, “all be in this together” but clearly some of us are more in it than others.

John Philpott is chief economic adviser at the CIPD