The timing of the first interest rate rise in more than five years will depend on how many workers get a decent wage rise. Bank of
Optimists believe that, after six years of falling real incomes, workers are due an above-inflation rise. So far it hasn't come, but they argue that staff shortages will soon translate into higher pay.
As the Bank's regional agent network recently reported, the
Officials said a halving in average weekly earnings growth to 0.7% in the three months to April, from 1.4% in the three months to January, could reflect a trend for new jobs to be "concentrated in lower-paid sectors". It added: "Perhaps relatedly, recent employment growth had been more heavily skewed towards lower-skilled occupations."
Rate setters also worry about self-employment, up by 700,000 since 2008 and accounting for more than two-fifths of job creation in this parliament. Many new members of this 4.5 million-strong sub-group are redundant public sector workers picking up contract work. Then there are the 100,000 or so construction workers who have probably rejoined the ranks of the self- employed. It is a mixed bag of people, some of whom could see their incomes rocket as the economy recovers, and others who won't.
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