Workers should “think and think” before demanding pay increases, Bank of England chief Andrew Bailey told MPs on Monday.
The governor said that high earners in particular should consider the impact of inflation before applying for a raise as prices rise.
It comes as the Office for National Statistics (ONS) is due to confirm later this week that inflation has topped 8%, while the Bank of England itself has warned it is likely to peak at 10.25 by the end of the year percent could reach.
Mr Bailey told MPs on the Treasury’s selection committee: “I spoke about it in an interview. I think people, especially people with higher incomes, should think about demanding big pay rises.
“It’s a societal issue. But I don’t preach about that. I was asked if I gave myself a raise this year and I said no, I had asked the bank not to give me one because I felt it would be right for me personally.
“But everyone has to make their own judgment about that. It’s not my place to go around telling people what to do.
“In that sense, I know I might have been interpreted that way, but I wasn’t. What I was trying to say is that maybe people should think about it, especially people in this situation.”
But unions hit back at Mr Bailey, saying he shouldn’t “teach” workers about wage restraint.
Unite General Secretary Sharon Graham said: “Again workers are being asked to pay the price, this time for inflation and the energy crisis. Inflation was not caused by workers. Why should they pay for the failure of the energy market and the total shattered state of government policy?
“Workers don’t need lectures from the Governor of the Bank of England on the exercise of wage moderation. Why do rich men ask ordinary people to pay for it every time there is a crisis?
“Enough is enough, we will demand that employers who can pay pay. To be clear, wage moderation is nothing more than a call for a nationwide wage cut.”
Whilst defending central bank monetary policy, Mr Bailey warned of an “apocalyptic” risk of rising global food prices triggered by the war in Ukraine.
Mr Bailey told MPs he felt “helpless” even as households were battered by rising inflation.
“The main driver of inflation and what drives it down is the very large real income shock that comes from outside forces and notably energy prices and global commodity prices,” he said.
“That will affect domestic demand and dampen activity and I fear it looks like it will increase unemployment.
He told the committee that “we are walking a very narrow path” between rising inflation and risks to growth.
Mr Bailey said the war in Ukraine had led to an unpredictable rise in inflation and stressed there was still “great concern” about further increases in food prices due to ongoing conflicts.
He said: “Ukrainian finance minister said that food is in stock but they cannot get it out.
“Although he was optimistic about growing crops, as a major supplier of wheat and cooking oil, he said we have no way of shipping it and it’s getting worse.
“This is a major concern for this country and a major concern for developing countries.
“Sorry to be apocalyptic, but that’s a big problem.”
Food inflation in the UK rose 5.9 percent in March and is expected to accelerate in the coming months.
The governor also told the committee that he didn’t think the bank “could have done anything differently” to avoid sharp price hikes.
“There have been a number of supply shocks, most recently from the aftermath of the war – Russia’s invasion of Ukraine.
“We can’t predict things like wars – it’s not in anyone’s power.”
https://www.independent.co.uk/news/business/news/bank-of-england-pay-rise-andrew-bailey-salary-b2080309.html Bank of England governor calls for wage moderation to curb inflation