In some highly skilled jobs, it has been possible to name your price. Still, on average, regular pay growth was 4% higher in the December-February quarter than a year earlier, and 5.4%, including bonuses. That’s still below inflation, but it’s also the highest rate of increase in nominal wages since the financial crisis.
The stagnation of wages has been one of the great complaints since then; finally things seem to be moving again.
Those who argued that Brexit would equate to a positive supply-side shock to wages, as the PM did, have been proven partially right.
In any case, the demand for labor is outstripping supply. There is an open war between rival firms when it comes to talent, and we shouldn’t be unhappy about it.
Unfortunately, there simply aren’t enough workers with the desired skills, or at least if there are, they tend to be in the wrong places.
The solution to this problem is more training, but only the best companies tend to provide it to any significant degree.
In many companies, the idea of training rarely extends much beyond basic induction and instruction in health and safety. Government support for training remains almost non-existent. (As a political initiative, the apprentice tax has been a desperate and costly failure.)
As it is, the Treasury continues to resist anything significant in the way of training tax breaks, on the reasonable grounds that it would simply be a loss of revenue for the government.
Firms inclined to train staff in new skills will do so anyway, while those that do not train are unlikely to be incentivized; rightly or wrongly they believe there is no benefit to them.
Spending on training is a waste of money if once trained, the employee just takes their skills elsewhere.
Therefore, there is still an unfortunate tendency to hire abroad when necessary, instead of retraining the local workforce.
This attitude has to change. Incentives for training, even if they introduce an element of compulsion, must be a high priority for the Government.
In the meantime, let’s stop playing silly political games with statistics.
Yes, it’s good to have a tight labor market, but the productivity gains that the economy so desperately needs aren’t going to happen unless the government tries to address the underlying causes of these shortages.
This article is an excerpt from The Telegraph’s economic intelligence bulletin. sign up here for exclusive insights from two of the UK’s leading economic commentators, Ambrose Evans-Pritchard and Jeremy Warner, delivered straight to your inbox every Tuesday.