Wages still low for BOE to hike rates

While Bank of England (BOE) based rising pace of wage growth as one of their key arguments in support of hiking rates next year, latest report by Office of National Statistics (ONS) on wages may dampen the mood of policymakers.

• According to latest report as of last year, almost 20% of the jobs in UK paid less than the living wages. Mainly women and younger workers suffered over this.
• In hits research, living wage foundation has calculated that workers need to be paid at £9.15 per hour to meet the cost of living in London and £7.85 in rest of UK and current minimum wage is £6.70 for workers over the age of 25 and £5.30 for 18-20 year-olds.

According to ONS, last year about 6 million people received wages under this. Back in the period of 2008-10, 13% of the London workers received wages below living wage, which by last year has increased to 19%.

Government has recently proposed increase in minimum wages, which will rise from £7.2 per hour when enforced to £9 per hour by 2020. However the number shows that may not be sufficient.

Bank of England (BOE) policymakers not only sounded relatively dovish in their last policy statement but said that current wage growth is not enough to push inflation higher. However it has also mentioned is also not enough to keep pace with rising rent cost in UK.