Carney addressed the UK’s sluggish wage growth, saying that year-on-year growth of 0.6% in 2014 is “very weak”.
He offered weak productivity per hour – the result of employers investing in “labour over capital” – as one reason for largely stagnant salaries in the UK. “That weak productivity growth is not the result of laziness on anyone’s part. It is a natural consequence of so many people wanting to work and companies employing them in place of capital,” he said.
Carney predicted that a further fall in unemployment will mean employees will start to see their pay increase over the coming years. “As employment approaches its new higher level, wage pressures should increase and capital investment should continue to recover,” he explained.
“Productivity growth should pick up bringing the higher, sustainable pay rises that British workers deserve.
“Specifically, the bank’s latest forecast expects real wage growth to resume around the middle of next year and then to accelerate as the unemployment rate continues to fall to around 5.5% over the next three years.”
TUC general secretary Frances O’Grady stated that Carney “recognised the pain felt by British workers” due to real-terms pay cuts over a number of years.
However, Unite general secretary Len McCluskey called the speech “a missed opportunity to bring hope to working people”. “Mark Carney should have made a strong call to business and the corporate sector to take more responsibility for providing greater employment opportunities, boosting pay levels and taking more a proactive role in the communities in which they operate,” he said.
Adzuna co-founder Andrew Hunter pointed to strong recent wage growth in both manufacturing and engineering, making them attractive areas to move into. “Employers are having to battle it out to attract the skilled staff they need to meet rising demand,” he added.
“Carney is right, but in today’s fast-moving jobs market we need to look to the future and make strong moves, more quickly than ever before.”
See more at: http://www.hrmagazine.co.uk/hro/news/1146485/carney-predicts-wage-growth-pick-mid-2015#sthash.BbPzYLqk.dpuf