Pay rises ahead? UK labour shortage ‘intensifying’, says BoE

Financial Times. December 20, 2017

 A shortage of labour in the UK has become a growing concern for businesses and may help drive up pay settlements in the new year, according to the Bank of England. Recruitment difficulties had continued to intensify, becoming more broadly based across sectors and skill levels the latest survey of business conditions from the Bank of Englands regional agents covering the final quarter of 2017 revealed.  While less skilled posts were generally easier to fill than skilled ones, this too had tightened for some [business] contacts, notably those that relied heavily on seasonal workers (for example in horticulture and agriculture), mostly from the European Union, they wrote. The agents went on to say that while there had not yet been any sign of an increase in pay settlements, their contacts expected pay growth settlements to increase to 2.5 to 3.5 per cent from 2 to 3 per cent this year. A greater focus on other benefits and a limited number of pay reviews in the final quarter of the year meant that wage growth had increased only slightly during the survey period. Businesses told the agents that a shortage of workers was likely to be the biggest constraint on capacity in the UK, followed by a lack of specific skills. The Bank of Englands 12 regional agents interviewed at least 700 businesses across the UK for their reports, The interviews for the latest survey took place between late August and late November. However, they took place before the Black Friday sales in November. The agents said this might explain why they had found evidence that consumption growth would slow as consumers may have been holding off for the sales.