There is evidence, across a number of countries, of the labour share having fallen over recent decades (Chart 24). Even in the UK, the labour share has glided south, if more slowly than elsewhere, over recent years. The relationship between productivity and real wages tells a similar story. Across a number of countries, there is recent evidence of real wages falling short of productivity (IMF (2015)). In the US, this has been evident since at least 1970, with average real wages rising 0.6 percentage points per year more slowly than productivity (Chart 25). In the UK, that gap has averaged 0.3 percentage points per year since 1990. For median wages, these gaps are larger still (Chart 26). Over time, these gaps can accumulate into big income differences. Had US real wages tracked productivity since 1970, the median worker today would be 40% better off. Had UK wages tracked productivity since 1990, the median worker today would be 20% better off. Unlike earlier phases of rapid technological change, labour has not shared equally in the fruits of recent great leaps forward – or at least not yet. A number of explanations have been put forward for these falling labour shares, including the falling relative cost of capital goods and globalisation (OECD (2012)). A third explanation, related to the first two, is technological change. As machine has substituted for man across a greater number of tasks, and as hollowing-out has intensified, the balance of bargaining power has swung against labour.
BIS central bankers’ speeches  11  These alternative models of corporate governance offer a different balance of power between capital and labour. Indeed, the distinction between the two is blurred: the owners of, and workers for, the robots are in effect one and the same. These governance structures may allow a more equitable distribution of robotic rents and generate greater value for the companies themselves and for wider society. Turning to the nearer-term, what if any implications do these labour market trends carry for the economy and monetary policy? Last week, the MPC set out its view in the quarterly Inflation Report. This painted a picture of solid UK growth, alongside subdued price pressures. The UK is growing roughly at trend, but inflation is 2 percentage points below target. The picture among other advanced economies is not greatly dissimilar. The UK inflation picture is relatively easy to explain, at least in an accounting sense. The lion’s share of inflation’s weakness is accounted for by external factors – weak world prices and a strong exchange rate. These factors are themselves in part a reflection of weak world demand, pushing down the prices of oil and other commodities. The impact of external disinflationary pressures on UK inflation is thus likely to be persistent. Nonetheless, in time these external pressures should wane. What will then determine UK inflation is the evolution of domestic costs, specifically labour costs. The UK labour market has been hard to read over the past few years.