28th November 2017.
Wage Growth Is On Its Way Back!
Pay is finally rising across the UK as unemployment falls to record lows and companies have to raise wages to fill gaps in their workforce, the Bank of England has reported.
According to policy makers, there has been recent evidence that the long squeeze on incomes has finally come to an end.
Despite many officials expecting wage growth to respond to the low unemployment rates, pay in the UK steadied. Factors such as Brexit uncertainty and effects from the financial crisis were influencing this reluctance to commit more money to the workforce.
The recent skill shortage however has led employers to think of new ways to inspire their current workers. British economist, Gertjan Vlieghe observed that building pressure in recruitment has led employers to pay their staff more.
He also found an increasingly stronger confidence within skilled workers, who are now willing to move for jobs with higher pay. This contrasts with the mood a few years ago where fears over unemployment would have driven people to stick with what they had.
Vlieghe further told the Treasury Select Committee of MPs that the record low unemployment is a key factor in the improved wage growth. Joblessness has now fallen to 4.3 per cent, the lowest level in 42 years.
Mr Vlieghe’s colleague Michael Saunders and deputy Governor Sir Jon Cunliffe, joined Vlieghe in front of the Committee, but expressed more caution towards this new information.
Mr Saunders warned the MPs that the slowed inflow of foreign workers into the UK, on account of Brexit negotiations, could lead to a tightening of domestic conditions and make any change to wages more sensitive.
Furthermore Sir Jon Cunliffe, who had also voted against rising the interest rates earlier in the month, suggested waiting a little longer to be sure wages are really on the up.
The Credit Protection Association supports any move that may aid workers in the UK. Providing workers with monetary incentives may lead to improved productivity, which has been struggling the past month. However with Brexit uncertainty as it is, CPA understands the caution that deputy Governor Sir Jon Cunliffe expressed, particularly when the Brexit impact on EU workers in the UK is not yet established. We encourage our Members to take a second and third look at their financial position and Brexit provisions before increasing pay. It would not be advisable to reward your staff if that action will damage your cash flow and even your business.
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