Wednesday, December 17, 2014

Interesting view!

UK wages set to continue to beat inflation with a 2.5pc rise in pay over 2015

If inflation was stable then wages rising above inflation would be great maybe, but this article misses that there has been about 7 years of inflation going above wages!! So to speak about solely this year is meaningless. Wages are accelerating due to the amount of extra cash that has been pumped in because the extra cash eventually spreads out.

Posted by stillthinking @ 12:00 AM (4078 views)
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8 thoughts on “Interesting view!

  • “but this article misses that there has been about 7 years of inflation going above wages!! So to speak about solely this year is meaningless”

    Nothing is meaningless but if you are going to say that it is meaningless then I would have to say that your comment is meaningless without also saying that real wages had previously been rising almost continuously since 1978.

    “Wages are accelerating due to the amount of extra cash that has been pumped in because the extra cash eventually spreads out”

    That’s a fairly crude statement without explaining the mechanisms, pathology and time lags behing your theory. However if we were to take it at face value, we would have to balance it with something equally crude like ‘pumping money in causes inflation’. At this stage we’d have to screw up the piece of paper and try again.

    The school of thought I subscribe to is that unemployment in the last recession was kept at a much lower level than in previous recessions by reducing real wages and/or reducing hours. By way of contrast in previous recessions real wages for the employed held up quite well but far more people lost all work. I make no comment as to which scenario is best.

    Real wages are now rising above inflation because there is close to full employment for skilled workers. It is economics 101 that real wages experience upward pressure when this happens.

    Now, I am aware that oil prices will now be brought up but under that rational we’d have to put a qualifying comment by every year on a multi decade chart. “Ah yes but in 1947 real wages only fell/went up because then in 1948 real wages only fell/went up because ad infinitum. Inflation is what it is and we can perhaps liken the futility of qualifying every year in history by invoking the adage used when trying to compare boxing fighters from different eras. “You can only beat what’s in front of you at the time”. In times of higher employment, wages tend to respond by slightly besting the inflation rate, regardless of whether it’s high or low.

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  • To save on mindless arguments and to save those from extrapolating a single days data into the next millennium.

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  • Don’t be so bitter khards. The article is about a forecast for 2015. It is fairly mindless to refuse to discuss what’s in the article. It’s what we’re supposed to do here. Someone posts, we discuss. On the other hand, with your track record, I can fully understand why you would have retreated from the concept of forecasts.

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  • Yup, a drop in the price of oil is the only pay rise the folks in the UK are going to get. Don’t spend it all at once!

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  • Oil volatility will sort itself out when producers who can’t make a profit stop pumping. Wages are less volatile and I suspect the people holding the IR lever are watching this carefully. All we need is some tightening on immigration and Goldilocks will soon our island.

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  • soon leave our island

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  • Oi Flashy, you wrote, at 07.37 on another thread that it would be your last musings on HPC……looks like you couldn’t stay away 😉😉😉

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  • These figures are to be expected, those elves have all got packing and postal jobs, and the obese chap with the ho’s is off jobseekers and has a delivery job. I think it must be a zero hours contract though, as all deliveries take place at midnight.

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