This suggests the UK’s lost decade for real pay can, to a significant extent, be accounted for by macro-economic developments: cyclically, the large pool of unemployed that built up immediately after the crisis, generating a drag from the unemployment gap; and structurally, from lower levels of productivity and a lower NAIRU than in the past. With those accounted for, there is far less of a pay puzzle left to explain. The Wage Bargaining Game  A more granular look at the labour market suggests, however, that it is not behaving identically to the past. Tectonic shifts in the labour market - cultural, contractual, technological, organisational – have come thick and fast recently. Because this structural change is slow-moving, it is difficult to detect in monthly pay movements. On a longer fuse, however, empirical evidence suggests these seismic shifts in the jobs market are influencing pay significantly. The Phillips curve plots the relationship between the stock of unemployed and wage growth. Another strand of the labour market literature has looked instead at flows of people into and out of work and the associated 7  process of job-matching between employers and employees. In these models, pay is determined by flows of workers between jobs, and by the relative bargaining strength of employees and employers, as well as by fluctuations in labour demand and supply. 7  For example, Moscarini and Postel-Vinay (2017).
Anita Angelovska Bezhoska: Address – Balkan Business Week Address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the Balkan Business Week, Skopje, 7 June 2021. *** Dear all, Ladies and gentlemen, The world economy has been faced with one of the most severe threats ever – a pandemic capable of bringing societies to their knees by threatening their livelihoods and wellbeing. Western Balkan countries, as small and open economies, were not shielded from this global shock, but were caught on a strong footing, amidst solid economic fundamentals and absence of significant disequilibria mirrored in solid growth pattern and moderate inflation. Despite this favourable initial condition, the magnitude of the GDP adjustment was immense, with an average contraction of 6.4% in 2020, which is three times stronger compared to the global financial crisis. Although it is a common global shock that in a synchronized manner affects all economies, the scrutiny of data reveals notable differences in economic losses, which to a great extent can be attributed to the different sectoral composition of the economies, their pre-crisis vulnerabilities and availability of policy space for reaction to the crisis. The dispersion of growth outcomes ranges from -1% (Serbia) to -15% (Montenegro)1. The recession was particularly severe in countries that rely more heavily on services, especially those largely dependent on social interaction, as well as countries with industries closely tied to the European production chains.