Ground and refueling staff at Heathrow Airport be prepared Strike action over the February school holiday. 3,000 Airbus employees can leave in March.Truck and bus drivers across the UK are demanding – in some cases win – Wages soared after seeing wages skyrocket for truck drivers with similar skills.

The current salary negotiation season is shaping up to be one of the most confrontational in years after industrial action stalled due to the pandemic.

It is being watched closely by policymakers at the Bank of England, who are very concerned that a spike in inflation – initially caused by rising global commodity and energy prices – could become a lasting phenomenon if factored into domestic wage settlements.

Most forecasters expect the Monetary Policy Committee to raise interest rates when it meets on Thursday to avoid the risk of a so-called wage price spiral, when workers demand pay rises to match higher living costs and companies raise prices to protect their profits rate in an iterative, self-actualizing process.

This would be a complete reversal of the current trend. Real wages have barely risen since the 2008 financial crisis, with workers forced to accept lower living standards in years when rising oil prices or the currency impact of Brexit pushed inflation higher.

But as outside MPC member Catherine Mann, last month warningthe current environment of higher price inflation and a tighter labor market could “presage regime change”.

“If the psychology of higher inflation is to take root, it will be through wages and pay settlements,” said Neil Shearing, chief economist at consultancy Capital Economics, adding that even with union power weakened over time, workers can still be forced to raise wages when they are in short supply and willing to quit for better jobs.

That is The current situation in the UKfor the first time on record there are nearly as many job openings as job seekers.

Kevin Rowan, head of the trade union assembly organisation, said the upturn in industrial action reflected the “zeitgeist” of workers who knew they were needed and were ready to “show a little bit of strength”.

Still, wage pressure has so far been concentrated in industries with severe shortages. Advertised salary rates tracked by job site Indeed climbed more than 6% over the past year for jobs in hospitality, construction, manufacturing and logistics.

But in other areas, including sales, management and legal, they have been flat or declining. Across all of the job ads posted on Indeed, wage rates rose by about 4% — a higher, but not excessive, increase from pre-pandemic growth rates.

The ONS’ overall indicator of pay growth showed average weekly earnings excluding bonuses were 3.8% higher than a year earlier in the three months to November, similar to the nominal growth rate in the summer of 2019.

This means that for most people, prices will rise faster even as wages rise. While companies are concerned about losing employees to competitors, they also face many other pressures.

Fabrice Montagne, chief UK economist at Barclays, said: “Businesses have countless reasons to oppose wage increases as much as possible because all their other costs are rising.”

However, even if wages lag prices, it still grows fast enough to keep inflation above target for longer than the Bank of England finds comfortable. And the pressure is increasing — not just in industries like hospitality or care that have become less attractive to work since Covid.

An investigation by Bank of England agents in December found that companies that had previously frozen wages had to raise wages mid-year to deter workers from leaving, while some employers offered as much as 40 per cent to attract workers elsewhere.

Compensation settlements have become more generous since the start of the year, according to data collected by research group XpertHR.

Sheila Attwood, executive editor of XpertHR’s compensation and human resources department, said early responses indicated that the compensation incentive agreed in January would be the highest since December 2008 (when it averaged 3.6%), Frozen pay and low incentives are rare these days.

Most economists still don’t think wage growth will take off like it did in the 1970s, when the term “wage-price spiral” was coined.

But Goldman Sachs chief U.K. economist Steffan Ball said wage growth would be “significantly higher” than the Bank of England’s November forecast, with the labor market tighter than it has been in decades, and enough to justify continued monetary tightening in 2022.

Monetary policy committee members said they did not see inflation under control unless wage growth was contained, even though it would mean lower living standards.

Mann said last month that monetary policy needs to “moderate expectations for higher wages and prices in 2022” despite the painful impact on households.

“I know there’s been a lot of talk about cost-of-living crunch,” she said. “My goal is not to make things worse than they are now – rather, my goal is to bring inflation back to target so workers get real wage gains from their labor.”