Smaller Pay Increases and Lower Interest Rates Can Mean More Jobs
The next few years will be marked by high unemployment and low productivity growth in the business sector. Pay increases at the central and local levels are expected to average 3 percent per year in 2013–2015, and unemployment will decrease to 7 percent, though not until 2015. Economic recovery could proceed faster if more limited pay increases were backed up by a lower policy interest rate. One factor making it harder to reduce unemployment more quickly, however, is that firms face growing problems in finding personnel with the right qualifications. This is the NIER’s assessment in the