Deputy governor also says company must rein in profits as there is ‘some way to go’ to meet 2% inflation target
  • geissi@feddit.deEnglish
    0·
    9 months ago

    This could only work if inflation were driven by wages.
    If the UK is anything like the rest of the world right now, then that is not the cause. Supply shortages are.

    So they would have to either:
    A) accept inflation and INCREASE wages to compensate for higher costs of living, or
    B) increase production and thereby supply to reduce scarcity induced prices.

    (possibly also C) be a member of a large free trade zone that makes importing cheaper but that ship has sailed for now)

      • geissi@feddit.deEnglish
        0·
        9 months ago

        Depends.

        IF only some companies increase wages then they can probably reduce turnover. Though that might cause more turnover in other companies that don’t increase wages.
        If wages rise through the board and the better paying companies before remain the better paying companies after then that probably has little effect.

        I suppose higher overall wages could reduce the pressure to look for a better paying job because your current one doesn’t cover costs of living.

  • Wirrvogel@feddit.deEnglish
    0·
    9 months ago

    When I was taught about the ‘wage-price spiral’ at school, I asked the teacher why it wasn’t called the ‘price-wage spiral’, because at home my parents only ever talked about the need for higher wages when prices went up, and the teacher said: “Because your books about it weren’t written by the unions, but by industry.”

    “Some combination of moderation in pay pressures and firms’ margins will be required for services inflation to return to more normal rates,” she said.

    Let’s only talk about the wages and not the margins, right? And of course do not at all talk about big business and extremely rich people not paying taxes on the money their workers have made while not getting paid properly.