Sharp pay rises may induce Bank of England rate increase
Christopher Snowdon quoted in The Mail
Commenting on June’s labour market statistics, Labour Market Expert at the free market think tank the Institute of Economic Affairs, Professor Len Shackleton, said:
“Today’s labour market data are, on the face of it, fairly positive. Good news is that employment and hours worked are up again while the unemployment rate, despite a marginal increase, is well below expectations.
“Despite failing to match inflation, pay is up sharply raising the spectre of a wage-price spiral, which may induce the Bank of England to raise interest rates again.
“Part of the boost to pay will have been caused by the exceptionally high increase in minimum/living wages in April. This will have affected approximately 8 million people: with the pay of immediate supervisors rising in line with minimum wages. It may be that the Low Pay Commission’s recommendations need more careful scrutiny in future.
“While increased immigration boosts overall employment, it may be obscuring what is happening to the existing workforce. It is disturbing to see long-term sickness increasing yet again. This is an issue the government really needs to tackle- by reducing NHS waiting times, but also by more rigorous tests of fitness to work.”
Notes to Editors
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