The third common global element is low wage growth (Graph 1). This is occurring despite very low unemployment rates in countries such as the US, Germany, Japan and the UK. The unemployment rates in these countries are at levels that have historically been associated with an acceleration in wage growth. The Governor talked about this in a speech late last year.
2 Andy Haldane at the Bank of England recently discussed some of the possible explanations for this stubbornly low wage growth and concluded that, in the end, we don’t yet have a particularly persuasive explanation.3 That said, we know that the labour supply curve ultimately does slope upwards.