You will have read elsewhere that inflation is below zero and wages, after a period of stagnation, are rising again.
That last is generally ascribed to a recovery after the recession. With unemployment now having apparently settled below 6 per cent in the UK, people are confident enough to ask for more money, and employers are prosperous enough to afford this.
There is a much wider picture, though. The world is running out of wage slaves.
Have a look at this blog from Duncan Weldon, Newsnight economics correspondent. You can find it here. http://www.bbc.co.uk/news/business-34488950
Weldon’s thesis, and that of other economists, is that the proportion of the world population that is in work rose sharply in the four decades to 2013. The “Baby Boomers” born after the War came to maturity, and contraception kept the number of dependent children down, allowing more of them to work.
Then China and the former Soviet Union entered the world economy. Weldon says the global workforce available to employers roughly doubled in two decades.
Since 2012, when the share of the world population of working age peaked, it has been declining. The Baby Boomers started to retire. That lower birth rate meant there were fewer of their offspring available to replace them. Before that, the ready availability of labour had been driving down wages across the world, in countries as different economically as the US, Japan and Sweden.
This is why the Germans are so ambivalent about migration. They appreciate they will have to import workers from younger working populations. There is a limit to the extent that can happen, for reasons of social cohesion.
Acting against this fall in the availability of labour, of course, is automation and advances in IT, I would point out. How they will balance out remains to be seen.
This looks like a huge demographic change, though. Already the rising cost of living in cities like London is leading to staff shortages. Ask any recruitment specialist, and I speak to them regularly, and they tell of a lack of trained people, especially in areas such as IT. The IT crowd can in some places name its price. And demand offices in trendy areas such as Clerkenwell with chill-out rooms, table tennis tables and Spacehoppers to get around the office. (This is true, BTW, except perhaps the Spacehoppers. Well, not in every office.)
If that supply of available labour does tighten, then the current rise in wages, against a low inflation environment, will accelerate drastically. It has to. Those higher wages, though, may then stoke inflation. Which will trigger further demand for higher wages.
We have been here before. The Black Death in the 14th Century, when a third of the population died, led to a shortage of agricultural labour. Wages shot up. The extra freedom this gave workers was one of the factors that broke the old feudal system, and led to the rise of the mercantile middle classes, and the transfer of economic and political power from the old aristocracy to them. It ultimately led to the Civil War.
One thing that keeps the chief executives I speak to every day awake at night is that shortage of the right people for the right jobs. This is why the business community is so keen on immigration, not just to find low-paid workers but to bring in well-trained technocrats.
If the above is true, the relationship between employee and employer could be set for a radical change, to the great benefit of the former. Bring it on.