Thursday, Nov 30, 2006
BOE thinks wages are too high
Hemscott (AFX): UK's real wages have not fallen enough - BoE rate-setters
Real wages in the UK have not fallen by enough to stop unemployment rising, two members of the Bank of England's rate-setting Monetary Policy Committee said today. However, the perceived arch-dove on the Committee, David Blanchflower reckons that wage growth in the economy has been over-estimated because pay indicators in the UK do not cover a quarter of the labour market.
Posted by jellycaster @ 05:46 PM (52 views) Add Comment
9 Comments
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1. Enuii said...
I remember a very wise American chap who posted a comment on the BBC's Have Your Say website saying that 'We were on the slippery slope to the lowest common global wage'. So lets see house price inflation is still soaring, energy costs are rising, the dollar is slumping and the BOE says that 'Real wages have not fallen enough'. I smell trouble ahead, if this was the 1970's we could expect a 'Winter of Discontent' though as we don't have any powerfull unions anymore I wonder how it will manifest itself this time and how long the time-lag will be.
2. Retiredbanker said...
In that case a good start could be made by cutting the remuneration of the MPC committee.
Energy costs have risen worldwide, so why is it necessary to reduce workers wages for the UK to remain competitive?.
Globalisation is resulting in a "race to the bottom" in wages and benefits; but only for ordinary people.
3. harold said...
BoE - what a bunch of jokers. Wage inflation is caused by the BoE printing too much money. Answer: BoE raise interest rates and stop winging about people trying to protect their standard of living.
4. Urine Truble said...
If wages come down in relative or real terms this must also drag down house prices, as we all know historically houses are about 3.5 to 4 times wages. In my area terraced house = footballer income. as for the national wages average £25,000, houses should be 75 - 100 k and this average is not representative.I think if the average wage was 25k then most people would be on that, most people I know are on 12 - 20 k I earn about £15000.00 where is my 60k house? Rant over
5. monty said...
Harold, if inflation was caused by by "printing too much money" then surely the answer is to decrease the money supply rather than increase interest rates? It's a whole lot easier and far more subtle to do.
The best thing Maggie ever did for this country was to break the unions. That is, by far, the biggest contributing factor to Gordon's low inflation economy.
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