BoE Gertjan Vlieghe said in an interview with the Newcastle Journal that wage growth is “still happening quite slowly”. And he pointed to 2% wage growth for “a couple of years” and its now “at about 2.5% or 3%” only.
He noted “the general idea is an old one that is still valued”. That is, “at some point the unemployment rate is low enough that it gets increasingly difficult for employers to find workers or keep the ones they have.” He pointed to unemployment rate at 43-year low, “reports of skills shortages” and “job turnover” at a cyclical high. And that “creates pay pressures as their companies try to attract employees and stop their own from leaving”.
But such development “has happened later in the process” and “it is only in 2017 we have been starting to see that.” He added one of the reasons was that employers did not reduce compensations during the financial crisis. Additionally, many people are classed as under-employment, showing that they’re only working part-time. Employment had turn to other method to compete for talent rather than just high pay.