A member of the UK200Group has commented on predictions that wages will rise
A member of the UK200Group of independent accountancy and law firms has today commented on predictions from the deputy governor of the Bank of England that wages will rise.
The Bank of England’s deputy governor, Ben Broadbent, has said that average wages will rise in the UK, as the country moves away from a lower skilled economy.
During a speech delivered in London, he said that the availability of inexperienced and lower skilled workers had helped depress productivity and wages after the recession.
He went on to say that easier immigration had made low-skilled labour easier to find and that deterrents to investment in physical capital and new technologies had also reduced the relative demand for high-skilled labour.
He concluded that a strengthening economic recovery in the rest of Europe would reduce the relative supply of low-skilled labour and was likely to lead to an increase in wages in the UK.
Jonathan Russell, partner at UK200Group member firm ReesRussell:
Technology has been a double-edged sword for both employees and employers, in that in some cases, it has removed the need for skilled labour where that skill has been replaced by technology, but in other cases skill is required to use the technology.
This has led to difficulties in recruitment, because many small businesses do not have the work to give to trainees or low-skilled workers and need staff that are already trained. However, in many cases the educational establishments providing training are lagging behind the current rate of change and are often training for a past or current requirement, rather than the future requirements of businesses.
Whilst all employers have to be aware of wage rates, most employers will pay the correct wage for the job, so with a growth in perceived low-skilled jobs due to technology, there is a demand for lower skilled/lower paid employees, but in most cases the higher skilled jobs will still remain well paid.
Part of the problem with technology is that it frequently leads to a need for higher skilled people, but fewer of them, so the proportion of high-skill to low-skill jobs changes. It may well be that it is not productivity that has dropped, but the way it is measured does not take into account these changes.