The UK jobs market is “very tight” with so few available workers that employers are having to hoard labor, Bank of England Governor Andrew Bailey told the House of Lords.
(Bloomberg) — The UK jobs market is “very tight” with so few available workers that employers are having to hoard labor, Bank of England Governor Andrew Bailey told the House of Lords.
Addressing the Economic Affairs Committee shortly after official data shook markets as wages rose faster than expected and unemployment fell, the governor said there are signs that the supply of labor is recovering but “very slowly, frankly.”
“We still think inflation is going to come down but it’s taking a lot longer than expected,” he said.
“Employers say they are finding it so hard to recruit labor in this market that they are not going to release labor, they are labor hoarding. They will adjust hours if they need but will be very reluctant to make people redundant.”
The tight labor market has consistently confounded the BOE as wage growth has overshot forecasts. Markets now think interest rates may need to rise as high as 5.75%, from 4.5% today, to cool demand for workers and curb high inflation.
He told peers that food prices have similarly been more persistent than expected. “We’ve been told more so by retailers than food producers that inflation will come down. Then the contact coming back later and saying, ‘Sorry, we got that one wrong.’”
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