Recent Developments in the UK Labour Market

Abstract

In this speech, Professor David Blanchflower, member of the Monetary Policy Committee (MPC), of recent developments in the UK labour market on the wider economy and monetary policy. He argues that the equilibrium or natural rate of unemployment has fallen over the past decade, and posits a number of possible explanations, including changes in demographics and work patterns, and declining union membership. He argues that a fall in the natural rate would suggest there is currently a significant degree of slack in the labour market, and that wage growth should therefore remain benign in the near term — consistent with inflation returning to target by early Summer 2007.