Labour Unions Tear Into BOE Governor Bailey Over ‘Wage Restraint’ Comments

(Bloomberg) -- U.K. labor unions have slammed Bank of England Governor Andrew Bailey after he called for workers to hold off on demanding big pay rises to help control inflation.

“Workers don't need lectures from the Governor of the Bank of England on exercising pay restraint,” Unite general secretary Sharon Graham said. “Why is it that every time there is a crisis, rich men ask ordinary people to pay for it?”

The pushback comes after Bailey, in a number of interviews about the BOE's interest-rate hike on Thursday, said workers needed to exercise restraint in pay negotiations to prevent a wage-inflation spiral. Bailey's pay tops 575,000 pounds ($780,000), about 18 times average earnings.

Gary Smith, the general secretary of the GMB trade union, said the comments were a “sick joke”.

“The nerve of Mr. Bailey is scarcely credible,” he said. “Telling the hard-working people who carried this country through the pandemic they don't deserve a pay rise is outrageous.”

The comments, also widely derided on social media, were particularly controversial as they come at a time when U.K. households are facing the biggest squeeze on real incomes in at least 30 years. While the BOE expects pay to rise by almost 5% this year, that will fall short of inflation, which is on track to hit 7.25%.

“Inflation has not been caused by workers,” Graham added. “Why should they be expected to pay for the failures of the energy market and the total shambles of Government policy?

Kate Bell, the head of economics at the Trades Union Congress, said real wages are already set to fall by 50 pounds a month this year, extrapolating from BOE forecasts. 

Asking workers and employers to hold pay rises down “will make the squeeze on family budgets even tighter,” she said.

Bailey told BBC radio on Friday that “we are looking to see quite clear restraint in the bargaining process.” He warned that otherwise, inflation “will get out of control.”

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