By Jonathan Davies

Real-term wages should start to rise "around the middle of next year" and "accelerate" in the months afterwards, the governor of the Bank of England, Mark Carney has told trades unions.

Mr Carney told delegates at the Trades Union Congress (TUC) annual conference that workers "deserved" to be paid more, and added that he expects unemployment to fall to 5.5% in 2015.

He also announced that he expects interest rates to rise at some point next year.

Mr Carney said: "Employment does much more than provide the means to support workers and their families; it is essential to personal fulfilment and human dignity. Part of that dignity is being paid a living wage.

"There are now over one million more people in work in the UK than at the start of the crisis. Total hours worked are some 4% above their pre-crisis level.

"That exceptional employment performance has come at a cost, however: wage growth has been very weak."

The government has come under criticism over wages, despite the reduction of unemployment. Low wage growth and the rising cost of living has resulted in people being worse off.

The TUC earlier this week called for the National Minimum Wage (NMW) to be raised to £10, more than 50% higher than the current minimum for 21 year olds.

Mr Carney said that, adjusted for inflation, pay had fallen by around a tenth since the onset of the financial crisis, adding: "To find such a fall in the past, you would have to look back to the early 1920s."

He said: "But, you rightly ask, when will this start? When will Britain get a pay rise? The expansion of labour supply does not mean permanently weak growth of real incomes.

"As employment approaches its new higher level, wage pressures should increase and capital investment should continue to recover. Productivity growth should pick up bringing the higher, sustainable pay rises that British workers deserve.

"Specifically, the Bank's latest forecast expects real wage growth to resume around the middle of next year and then to accelerate as the unemployment rate continues to fall to around 5.5% over the next three years."

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