job - to - job transition rate unionisation rate 0. 027 * * ( 0. 010 ) constant 0. 299 2. 876 * 1. 239 - 1. 249 0. 432 - 0. 125 ( 0. 794 ) ( 1. 347 ) ( 1. 459 ) ( 0. 676 ) ( 0. 800 ) ( 0. 288 ) observations adjusted r - squared 0. 603 0. 566 0. 604 0. 617 0. 644 0. 856 newey - west robust standard errors in parentheses * * p < 0. 01, * p < 0. 05 sources : ons, barclays and bank calculations. notes : estimation period is 1992q2 - 2018q2 for specifications 1, 2 & 3. for specifications 4 & 5 the sample begins in 1995q1 due to data limitations. the dependent variable for these models is the four - quarter growth rate of whole economy total average weekly earnings. as such, the residuals from these regressions will be serially correlated, and so we report newey - west standard errors. specification 6 is run on annual data back to 1892 ; the dependent variable is annual nominal wage growth. trend productivity growth is calculated as a five - year trailing average. all speeches are available online at www. bankofengland. co. uk / speeches

pay. the reason we have not is because longer - term, structural forces have also been holding back pay growth, notably weak productivity. over the medium - term, productivity is the single most important determinant of the national income pie. productivity growth pays for pay rises, at individual firms and for the economy as a whole. over the past ten years, productivity has barely grown in the uk. that second “ lost decade ” goes a long way towards explaining the lost decade in pay. productivity is not, however, the only structural factor at work in the labour market. the world of work is being reshaped in many advanced economies by the secular fall in the degree of unionisation and collective bargaining, by changes in employment contracts and working patterns and by rises in the degree of concentration and automation in the company sector. by reducing workers ’ “ pay power ”, they too have depressed wage growth, actually and prospectively. i will start by discussing recent pay developments and the factors responsible for driving them, cyclical and structural. i will then discuss the implications of these cyclical and structural factors for domestic cost growth, inflationary pressures and hence for monetary policy in the period ahead. jobs and pay i do not need to tell this audience that the past decade has been a strikingly weak one for pay growth. ten years ago, the mean weekly wage in the uk was around £435 per week. a decade on, it has risen to £520 all speeches are available online at www. bankofengland. co. uk / speeches per week, an average annual rise of less than 2 % in money terms. this makes it the weakest decade for growth in money wages for british workers since the 1930s. that is not the end of the story, of course. over the same period, consumer prices in the uk have risen by, on average, 2. 2 % per year. that means inflation - adjusted, or real, pay has fallen by around 3. 7 % cumulatively over the past decade. that weekly pay packet in 2008 has, in purchasing power terms, fallen to be worth only around £420 per week. this makes the recent period very unusual by historical standards ( chart 1 ). since as far back as 1870, there have been only two episodes when the real pay of workers has fallen over a ten - year period. the other episodes were associated with seismic shocks in the labour market, often wrenching technological change or sharp cyclical downturns