First published: Prospectmagazine.co.uk, 28/01/2014
Interview 2 by Jay Elwes
The Prospector had an in-depth chat with leading economist and author George Magnus on a wide range of domestic and global economic issues. This is the second of four parts of the interview which will be published here in the coming days.
Jay Elwes: On the matter of Britain’s stagnant wage problem, it seems there are two ways to look at this—one optimistic, the other pessimistic. Wages have been stagnant since even before the crisis hit in 2007/8. And they are stagnant still. And the implication of that is that we are experiencing a prolonged period of wage stagnation in the middle of which was the “Great Moderation”, so called, which led to a certain amount of wage inflation. But then came the crash and recession and wages are now back to their “real” rate. And that suggests that this period of flat wages will continue.
If that’s the pessimistic view, the optimistic one is that productivity is a lagging indicator and as growth returns productivity will pick up and wages will go up with it.
I wonder whether you recognise those two and if you prefer one over the other, or a synthesis of the two….”more:”