Tuesday, February 28, 2017

Bank of England - Clueless

 Women in the UK are participating in the labour market in ever greater numbers with the gender employment gap now at a record low. But rising female participation hasn’t been the only big labour market shift over the last 50 years. There has been a massive upheaval in the nature of work carried out too. The classic mid-skilled jobs of the past – secretarial and routine manufacturing jobs – are in long-term decline and won’t be coming back. The profound progress in pay made by the first four generations born in the 20th century came to a grinding halt for the millennials (those born between 1981 and 2000). Not only have they failed to claim a larger slice of the wages pie in their current workplace, they also moved job with less frequency.

There was supposed to be a quick bounce back from the crash of 2008 offering bumper pay rises all round, quickly pushing up the average wage to new highs. It was this rosy view that encouraged the Bank of England to forecast in every year since 2010 a rise in wages of such force that it said higher interest rates would be needed within two years to calm things down. It never happened. Not even the British “jobs miracle” of the last two years, which has seen the employment rate reach record levels, was able to bring about the expected jump in wages to 4%.  The thinking behind the theory was that once unemployment hits its natural rate, the labour market will be so tight that workers can almost walk into a job and in their newly confident state, start to bid up their wages. Last week MPs asked four B of E policy-makers how they could be so wrong year after year.

The Socialist Party could have answered that.

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