Brits are benefitting from a rise in wages for the first time in years, after the Brexit vote and a subsequent shortage of labour across sectors, the Bank of England believes.
Whilst not specifically mentioning immigration, bank economists spoke of “labour market tightness leading to upward wage pressure,” which is likely to be linked to a fall in the availability of migrant labour.
Gertjan Vlieghe, who sits on the Bank of England’s Monetary Policy Committee, has said: “We are hearing a lot that firms are finding it more difficult to recruit, not just in isolated sectors but there is more broad-based pressure. They are starting to respond to that by paying a little more.
“I am also hearing from a lot of people that their employees seem more confident to be willing to move jobs for higher pay, whereas previously they might have stuck with what they had.
“So it is early days, but I do think there is some evidence the process of labour market tightness leading to upward wage pressure has now begun.”
According to The Telegraph, he told the Treasury Select Committee that record low unemployment is one factor causing this, as joblessness has fallen to 4.3%, the lowest level in 42 years.
Mr. Vileghe’s colleague, Michael Saunders, agreed, saying: “I would also highlight the slowdown of inflows of foreign workers into the UK which may make pay growth here perhaps more sensitive to the tightening in domestic conditions than it has been previously.”
Despite the UK population recently hitting a new record high, immigration and birth rate projections have fallen in recent years, especially since the Brexit vote.
In 2014, the Office of National Statistics (ONS) estimated net migration of 185,000 a year. This October, it was cut to 165,000 a year, while the expected number of children per woman was cut from 1.89 to 1.84 in the same period.
Much of change is due to a slowing of EU arrivals. In August, the ONS said the number of EU migrants coming to the UK fell by 51,000 in the 12 months to March 2017, just months after the Brexit vote in June 2016.
Research by Migration Watch UK, published last month, found “no evidence” that companies require a “continuing free-for-all” access to EU migrants to maintain the workforce in lower skilled jobs.
“Some claims might reflect a desire by employers to continue to offer low pay, poor conditions and little flexibility,” the document claimed.