LONDON (Reuters) – Pay growth in Britain is accelerating “quite slowly”, despite the unemployment rate falling to a more than four-decade low, Bank of England rate-setter Gertjan Vlieghe said in a newspaper interview published on Wednesday.
A number of indicators showed employers were finding it increasingly hard to hire or keep the workers they need, putting some pressure on pay, Vlieghe told the Journal newspaper during a visit to the northeastern English city of Newcastle.
The BoE raised interest rates last month for only the second time since before the financial crisis, saying it expected wages to rise given the low unemployment rate.
Official data last week showed British workers’ pay picked up more than expected in the three months to July to a rate that has not been exceeded in three years.
Still, Vlieghe told the newspaper that progress towards faster pay growth had been sluggish.
“I think it is fair to say that this has happened later in the process and we have been expecting those signs. It is only in 2017 we have been starting to see that. It is still happening quite slowly,” Vlieghe said.
He cited the fact that many people are still classed as under-employed — meaning there remains a pool of workers who would be happy to take on more hours — as another reason for a slow pickup in pay growth, the Journal reported.
He made no comment about the outlook for BoE monetary policy decisions.
Vlieghe, an external member of the Monetary Policy Committee, has voted with the majority in each interest rate decision since his appointment three years ago, with one exception shortly after the 2016 Brexit vote.
Last week BoE Governor Mark Carney said uncertainty around Brexit has had a dampening effect on pay growth, although he added that recent data supported the central bank’s latest forecasts.
In August the BoE predicted total average weekly earnings growth would pick up to 3.25 percent in 2019 and 3.5 percent in 2020, compared with 2.6 percent in the most recent data.
(Reporting by Andy Bruce; editing by David Stamp)