Switchers have consistently experienced higher rates of pay growth than stickers, as we would expect. But it is striking how this differential has widened as the labour market has tightened over recent years, with movers securing pay increases of 7-9%, while stickers’ pay growth has until recently flat-lined at 2-2½%. Chart 20: Switchers’ and stayers’ pay growth Per cent Stayers  12  Switchers  10 8 6 4 2  1998  2000  2002  2004  2006  2008  2010  2012  2014  2016  0 2018  Sources: ONS and Bank of England calculations. (c) Rungs on the Jobs Ladder The second dynamic at work is that even those climbing the ladder have tended to do so at a less rapid pace than in the past. Or, put differently, the rungs in the jobs ladder have been closer together. This, too, may have reflected workers’ unwillingness to move occupation, industry or geography at a time of increased income insecurity. The Resolution Foundation has recently looked at rates of movement between UK regions.20 They find that rates of geographic mobility – people taking a new job in a different region – has been lower since the crisis than in the preceding period. Their analysis finds that this reduction in mobility is driven by the young and, in particular, young graduates.
Monetary policy responded with a force never previously seen in history. Today, the most likely shocks or downside risks to the economy are very different in their source and impact. They arise from factors such as global trade wars and Brexit. These shocks are different in their duration – more slow-burn than spontaneous conflagration. And they are radically different in their source, as they hit the supply potential of the economy, as much as its demand side. 31  El-Erian (2016). 32  All speeches are available online at www.bankofengland.co.uk/speeches  32  Consider the effects of Brexit uncertainty on the UK economy. By far the largest effects have been on companies’ investment and productivity. According to our Decision Maker Panel, investment among UK companies is estimated to be between 6-14% lower, and firms’ Total Factor Productivity (TFP) around 2-5% lower.32 These are large negative shocks to the economy’s supply-side potential. They are hits that monetary policy is not itself well-placed to mitigate. There is a risk of people normalising the deviance in monetary policy since the crisis. Around a quarter of adults in the UK working population have never experienced Bank Rate above 1% in their adult lives.33 In these changed circumstances compared with a decade ago, it is important that monetary policy is not a prisoner of its past, that the monetary cavalry are not called at the first whiff of grapeshot, that a dependency culture around monetary policy is not allowed to develop.