Pay Power Speech given by  Andrew G Haldane Chief Economist Bank of England Acas “Future of Work” Conference Congress Centre, London 10 October 2018  The views expressed here are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Will Abel, Shiv Chowla, Tomas Key, Brad Speigner and Ben Stokes for their help in preparing the text. I would like to thank Ben Broadbent, Clare Macallan, Becky Maule, Mette Nielsen, Silvana Tenreyro and Jan Vlieghe for their comments and contributions. This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. 1  All speeches are available online at www.bankofengland.co.uk/speeches  It is great pleasure to be here at the Acas Annual Conference whose theme this year is the “Future of Work”. It is a particular pleasure to have Brendan Barber as Chair. As a member of the Bank of England’s Court between 2003 and 2012, Brendan’s insights on the labour market and wider economy were crucial in helping the Bank steer a policy course through a period of first macroeconomic calm and then extra-ordinary macroeconomic storm following the global financial crisis. It is the labour market that I want to discuss today.
With workers fearful of unemployment – and employers having less need to attract workers given the large pool of unemployed – voluntary job moves plummeted, falling from around 1% of the working population pre-crisis to a low of around 0.5% in 2009. As the economy and jobs market has recovered, and job insecurity has fallen, more people have voluntarily moved jobs to secure a higher wage. Job-to-job flows today are back to their pre-crisis averages. In this tightening market, the pay growth of “twisters” has picked up markedly, from a little under 4% in the  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  aftermath of the crisis to over 7% now. 11  Through the direct (batting average) channel, this has in turn  boosted aggregate pay growth. More surprising, however, is how little impact strong employment has had on those not moving job. Wage growth for “stickers” has flat-lined at around 2%. Despite a tightening labour market, companies have so far not felt compelled to pay-up to any significant degree to retain workers. The indirect, or behavioural, channel for pay pressures has largely been missing during the recent jobs recovery. This may be a sign that stickers’ pay is behaving differently than in the past. Chart 15 plots two empirical Phillips curves – one for twisters, the other for stickers. The twisters’ Phillips curve is behaving relatively similarly to the past, with pay broadly as expected given the tightness in the jobs market.