James Moore: There's nothing pretty about the pay squeeze, but it can't go on for ever
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Tuesday 26 February 2013
Outlook Another year of wage freezes? It's coming for a lot of people working in manufacturing, at least according to the industry's trade body, the Engineering Employers' Federation (EEF).
That should be music to the ears of the Bank of England, especially now it is contemplating negative interest rates as a way of persuading banks to lend to get the economy moving.
With wages still flat, or even falling, in a number of sectors (including the public sector), one inflationary pressure at least is out of the equation if the Bank decides on such a radical step.
However, it should be said that there was something of Paul Tucker, the deputy governor in charge of financial stability, reminding us with the musings that he is still very much alive and kicking after being passed over for the top job.
Prescribing such a radical drug as a cure for Britain's credit famine would come with some dangerous side effects. Banks might, anyway, just pass the cost of keeping money on deposit at the Bank of England (the effect of negative rates) on to people who keep money on deposit with them.
As for those on the receiving end of the pay squeeze, the reality isn't pretty. There's a reason retail sales figures put out by the CBI weren't showing a very pretty picture (although they could have been worse). People have less to spend – and if there is anything spare, it's often being used to pare down debt.
About the only retailers that are doing well are those operating online plus land-based discounters such as Aldi, Lidl, Sports Direct and Primark. The trouble for their competitors is that people may not return if and when wages start to pick up. After all, why hand your money over to fancier outlets for the questionable benefit of a slightly more upscale carrier bag on your way home?
According to the EEF, we won't be here for ever, at least when it comes to manufacturing. There are signs that wages are starting to pick up, and this may gain momentum as manufacturers face up to the need to recruit and retain people with the skills they require.
There will come a time when shortages of key staff force wages higher. At the moment, people are still very much of the view that having a job is something to be thankful for even if the rewards aren't up to scratch. That situation can't last forever.
- 1 Windows 10: man updates PC, wakes up to find porn slideshow on repeat
- 2 The 'world's most beautiful vagina' has been debunked by science
- 3 John Green schools morning show hosts after awkward interview with Cara Delevingne
- 4 Bulletproof armadillo puts Texas man in hospital after shot bounces off hard shell
- 5 Doctors declare war on Jeremy Hunt over weekend working 'myths' amid plan for seven day NHS
Whoopi Goldberg tells Cara Delevingne to suck it up: 'She's not famous. I'M famous'
John Green schools morning show hosts after awkward interview with Cara Delevingne
Jack the Ripper's final victim set to be exhumed following new theory on the killer's identity
Supermodel Gisele Bundchen mocked for wearing a burka to avoid being seen visiting plastic surgeon in Paris
Bulletproof armadillo puts Texas man in hospital after shot bounces off hard shell
Yvette Cooper: Our choice is years of Tory rule under Jeremy Corbyn – or a return to a Labour government
Is Britain really full up? Are migrants taking our jobs? Leading academic answers the most common anti-immigration claims
Calais Migrant Crisis: Deputy Mayor of Calais labels Cameron's use of 'swarm' as 'racist' and 'ignorant'
Labour leadership: New poll shows party is now even 'less electable' than under Ed Miliband
While we fixate on Calais, the Home Office is quietly deporting dozens of migrants on 'ghost flights'
Calais crisis: The seven claims made about the migrants - and the reality
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...
£13000 - £15000 per annum: Recruitment Genius: Are you passionate about custom...
£22000 - £25000 per annum: Recruitment Genius: Main purpose: Under the directi...
£35000 - £37000 per annum + benefits : Ashdown Group: Contracts Manager - City...