A weak workforce

For years, the Bank of England has been trying to find the answer to a puzzle: why is wage growth so weak even though unemployment keeps coming down? Britain currently has its lowest jobless rate since the mid-1970s, but there has been no sign of an acceleration in earnings growth.

Part of the answer, according to Bank of England chief economist Andy Haldane, stems from structural changes in the labour market: a decline in union membership; more self-employment; more zero-hours contracts and more part-time and temporary work.

The clock has been turned back not one century but three, so that the world of work in 2017 bears more than a passing resemblance to Britain as it was before the Industrial Revolution. There were no trade unions. Most people were self-employed or in small business.

The thrust of Mr Haldane’s argument is that workers in an increasingly casualised, de-unionised and atomised labour market find it hard to chisel more money out of their employers, even when unemployment is falling and their living standards are being eroded by inflation.

There is plenty of evidence to suggest the current mix of ultra-loose monetary policy and over-tight fiscal policy needs to be changed. Chucking copious amounts of cheap money at the economy has not led to strong and sustainable growth.