Fall of unions and zero-hours led to '˜lost decade'

Andy Haldane said that while he sees evidence “of a new dawn” for pay growth, structural issues like a drop in collective bargaining could derail that trend.

“With wage growth picking up for the first time in a lost decade, the risks to domestic costs are now broadly-balanced, though still significant,” he said in a speech at a conference in London.

“Take unionisation. Its downward trend historically has suppressed pay growth. If this trajectory were to continue, the fraction of the workforce unionised would fall by a further 16% percentage points by 2030.

“According to our estimates, that could suppress wage growth by over a quarter percentage point each year.”

It could extend a 10-year period of lagging pay growth for British workers.

While job growth has been strong, pay growth has been historically weak, averaging at just 2% per year.

Mr Haldane said the pattern of weak pay can be explained in part by the large job losses following the financial crisis, which created a “significant” pool of unemployed workers and subsequent job insecurity.