Wednesday, December 18, 2013
Wage deflation caused by low interest rates increasing pension costs?
By Peter Franklin: Ã¢Â€ÂœReal wages are still falling, on average, and nobody seems to know what to do about it. Even though the economy is growing, millions are seeing their incomes depressed by low nominal pay rises and highish inflation. Ã¢Â€ÂœThe primary driver of higher pension costs in the national accounts Ã¢Â€Â“ and hence the pressure on wages in recent years Ã¢Â€Â“ has actually been the dwindling final salary pension schemes: costs to todayÃ¢Â€Â™s workers have exploded, benefiting older workers still in the schemes and especially people who are already retired. Workers as a whole are paying a steep price Ã¢Â€Â“ but only a minority are benefiting.Ã¢Â€Â Once again, it is younger people getting the rough end of the deal Ã¢Â€Â“ just as they have on house prices, tuition fees and the national debt.