Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
Reporting on key macro data at the time of release.
Real-time insight on key fixed income and fx markets.
- Emerging MarketsEmerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
- MNI ResearchMNI Research
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
- About Us
--BOE Decision Maker Panel Data: Brexit Curbing Employment Growth
By David Robinson
LONDON (MNI) - The Brexit process is curbing the ability of firms to hire
without driving wages up, a Bank of England advisor told Market News in an
Paul Mizen, who co-ordinates the central bank's Decision Maker Panel (DMP)
business survey with Stamford's Nick Bloom, told MNI that firms' atrophying
hiring seems to be linked to growing labour shortages. BOE agents, along with
private sector surveys, have all highlighted the difficulties firms are
experiencing recruiting, while wage growth so far remains subdued.
"If anything the (Brexit) effects are being felt in hiring rather than in
wage negotiations," Mizen said.
The BOE agents fourth quarter report said that labour shortages had become
more widespread across sectors and skill levels. The fourth quarter DMP survey,
however, found that respondents expected wages to rise by just 2.5% in the next
twelve months, barely changed from the 2.6% reported for the past 12 months.
"It may well be that the firms that are expecting to hire less are simply
acknowledging that the supply of skilled labour is not going to be as plentiful
as it was before Brexit," Mizen said.
--EMPLOYMENT NET NEGATIVE
The DMP survey, which covers an extensive and rapidly expanding base of
company executives, found in its fourth quarter results that some 10% of firms
said that they would add additional labour as a result of Brexit while 31% of
firms said that it would subtract from employment, a clear net negative effect.
The most recent National Statistics data showed UK employment declined,
with a 56,000 fall in the number employed in August through October from the
previous quarter, the first fall in the non-overlapping three monthly employment
level in exactly a year.
Labour shortages will have direct and indirect effects on [firms], Mizen
said. The direct effect, which is already evident, is that firms are struggling
to hire skilled labour and they may also be running into difficulties hiring
"I think there is also an indirect effect which operates through the effect
of Brexit on the university sector. I think we are seeing a reduction in student
applications from the EU as the result of Brexit ... and that is going to affect
the future labour supply and the quality of skilled labour," Mizen said.
Prime Minister Theresa May has refused to back down on her insistence that
students are included in net migration figures and universities have reported
declining student applications from the EU. Data published in November by the
university admissions service Ucas showed a 4.4% fall in EU applications on a
year earlier, the first such fall since 2012.
A decline in applications from qualified overseas students, in sciences and
other areas, cannot be readily replaced within the domestic education system.
"You will just see fewer qualified people coming from the EU and therefore
firms will be affected by that. How is it going to affect the firms ? Well, I
think it is going to dent their productivity. With less skilled labour available
they are going to end up being less productive," Mizen said.
--MNI London Bureau; tel: +44 203-586-2223; email: firstname.lastname@example.org