Boris Johnson is often accused of playing quickly and freely with the facts. But when the British Prime Minister told the BBC on Sunday that wages were finally rising, he was telling the truth.

While official data is a minefield of pandemic-related distortions, the Office for National Statistics calculates the underlying annual growth of its aggregate wage measure between 3.6% and 5.1% for the three months until July, before consumer price inflation in this period. The Bank of England estimates private sector wage growth at around 4%, above its pre-pandemic rate.

Business leaders are reporting sudden pay increases for very different occupations as companies vie for workers – from slaughterhouse staff to bankers, welders to lawyers. “It’s a herd mentality,” said one. “There are salary increases of 10%, 15% that did not take place a few months ago. Suddenly, wages go up in many different industries.

Far more controversial, however, is Johnson’s claim that the labor shortages that have left supermarket shelves empty and gas stations dry are part of a “period of adjustment” to a more productive and more remunerated economy.

Despite the clamor from companies, real-time data still suggests that only a few people are getting a big pay rise, mostly in areas most at risk of sudden cessation of migration from the EU. The median hourly wage advertised for heavy truck drivers rose 15 percent between January and September, according to the job site Indeed, but in all of the jobs advertised rates of pay only increased by 1.3 percent.

BoE agents saw a similar discrepancy in salary rewards for existing employees – with increases of 10-40% for skills in short supply, but typical settlements of around 2-3%. For public sector workers affected by the government wage freeze, even that is out of reach.

Suren Thiru, an economist at the British Chambers of Commerce, said there was little evidence in his latest survey of members of higher inflation “fueling a widespread escalation in wage settlements.”

“The dispersion of wage growth has increased dramatically – so for the high numbers we read, there are also low ones,” BoE Governor Andrew Bailey said last month.

This could potentially be a good thing, if it means above-average wage gains in industries where low wages and poor conditions have led to chronic over-reliance on imported labor. “Wages are finally increasing for low wages. . . and it was about time too, ”Johnson said.

But it does mean that for most people the wage gains will be much smaller – and could be wiped out entirely by inflation, which the BoE expects to surpass 4% by the end of the year. ‘year.

Richard Walker, managing director of the Icelandic supermarket chain, told the Financial Times that rising wages and bills will soon be reflected in grocery bills, with the price of four pints of milk set to rise 9% in its stores .

“Wages go up for some people, but prices go up for everyone,” said Torsten Bell, director of the Resolution Foundation, a think tank. He added that wages had already risen faster at the bottom of the pay scale in recent years due to the minimum wage, but that had not led to the change the government wanted in overall pay and productivity.

Line graph of GDP per hour worked (2009 = 100) showing that the use of a

Even in those sectors of the economy with the greatest Brexit-induced shortages, workers’ new bargaining power may be short-lived. Bell said that in some industries, such as the hospitality industry, automation could increase productivity – with hotels already adopting touchscreen check-ins and cafes moving to self-service. But elsewhere, higher wages would simply mean higher prices, lower profits, and a contraction of some industries – with more food imported and people becoming more likely to wash their own cars.

Julian Jessop, an independent economist, said Brexit supporters left and right had always argued that ending free movement would increase wages, and therefore force companies to invest more and increase productivity – but that that would not change the situation. .

In the context of a tight labor market, “we’ll end up in a better place. . . regardless of Brexit, ”he said, predicting a cyclical recovery in productivity and real wages as the economy normalized.

But in the short term, acute labor shortages disrupting supply chains – which Walker described as a “self-inflicted injury” – have clearly delayed such a recovery in productivity, rather than collapse. ‘accelerate.

Kallum Pickering, an economist at Berenberg, said that due to worsening supply problems, he now expected gross domestic product to grow by just 0.8% in the fourth quarter, or half of the rate its previous forecast, adding that the government’s apparent shortcomings were hurting the economy’s performance.

The United States and major European economies faced similar challenges, but it was only in the United Kingdom that they triggered panic buying, he said. “The panic and hysteria in the UK partly reflects a growing lack of public confidence in the government’s ability to manage the economy and solve problems when they arise. . . It is troubling that panic buying can become a hallmark of the UK economy. “


Source link

Leave a Reply

Your email address will not be published.