Despite wage increases, the Bank of England’s chief gives a sobering productivity warning.
Despite the present surge in salaries due to a labor scarcity in the UK, according to a Bank of England executive, “so far” there has been no higher productivity growth to back it.
Michael Saunders, a member of the Bank’s Monetary Policy Committee (MPC), told the Telegraph on Saturday that “the best way, actually the only way, to achieve a sustained rise in real wages is through stronger productivity growth.” “So far, no,” he said when asked if there were evidence of higher productivity growth at the moment. “It’s really difficult to predict the intricacies of how productivity growth will speed up in ahead,” Mr Saunders said, “but we know the fundamental factors that help.”
“It’s where the economy expands steadily, corporate investment is strong, enterprises are able to plan for the long run, and skills, training, and a well-educated workforce are prioritized, as well as flexible marketplaces.”
“Once those prerequisites are met and enterprises are sure that they will be met, productivity growth tends to occur, and it is more likely to occur across industries.”
He went on to say that labor shortages “across many sectors” will “certainly, if not already, force up pay growth.”
While he stated that his comments were “not meant to be construed as a criticism of government policy,” he expressed concern that “with a tight labor market […] you might get pay growth creeping above the rate that is consistent with the inflation target, without the accompanying productivity growth.”
His conservative assessment of the current UK job market contrasts with the Prime Minister’s and other economists’ more upbeat assessments.
Patrick Minford, a professor of applied economics at Cardiff University, wrote in the Telegraph on Wednesday that “productivity has risen 2.6 percent in the previous 18 months,” as a “tightening” of the labor market forces businesses to employ labor “more effectively” and introduce new ways of working.
Following Brexit, new immigration regulations denying UK companies “free access to unskilled EU workers” means “economizing on unskilled workers is now as vital a managerial duty as […] has always been,” according to a Cardiff University professor of applied economics.
The Prime Minister also praised the wage increase, calling it “far overdue in the UK economy.”
“We are not going back,” Boris Johnson continued. “Brinkwire Summary News.”