Economics

On Wednesday we had the quarterly (or whatever) excitement about employment figures. It’s always interesting how different news outlets report this. BBC News (website) went with the positive ‘unemployment is down’, whereas BBC Radio 4 and The Guardian (more correctly, IMO) focussed on the more critical fact that wages were down in absolute figures even before accounting for inflation. On R4 they had some analysis about this but let Danny Alexander blame it on ‘low productivity’.

I very much wish that interviewers would ask: “why do you expect productivity to increase when the average person is seeing less money for their efforts?”. It is easier than ever to waste time at work thanks to the wonderful world of the internet, and anyone with half a brain should realise that working hard for no extra reward devalues their own labour.

I suppose the real answer to the wage conundrum is that wages are not solely, or even mainly, driven by productivity or profit, they are driven by a company’s ability to fill the roles they need to fill and retain staff in those roles. If a company is not feeling pressure in those areas, i.e. they are hiring fairly easily and have lowish employee turnover, then wages are going to stagnate. Unemployment is decreasing and if this continues then companies will find it harder to hire, at which point wages should start moving upwards. Until then, slack off as much as possible.

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