Need a pay rise? CMA publishes report on market power in labour markets
The Competition and Markets Authority (CMA) has published its first report prepared by its Microeconomics Unit, on competition and market power in UK labour markets.
The report examines employer market power and concentration in the labour market. It considers the ability of a firm to pay its workers less than the value of their contribution to the value of the firm’s output.
The CMA finds that market concentration in the labour market has remained roughly constant over the last 20 years. On average, wages are 10% lower in the most concentrated markets, compared to the least.
The report also examines the increase in hybrid and flexible working and the increasing importance of the gig economy.
The report raises a number of unanswered questions which will no doubt inform analysis by policy makers:
· What lies behind the geographical differences in labour market concentration?
· How do mergers and acquisitions affect labour market concentration and wages in the UK?
· What would the impact of changing labour market policies (for example, on non-compete agreements, pay setting and the minimum wage) be for worker mobility and wages?
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