Pay increases by a record amount!

[El Pollo Diablo]

https://www.bbc.co.uk/news/business-66501937

Although inflation rose by a higher amount, so real wages fell on average. Again.

And obviously, given the government's insistence that high wage increases drive inflation, this is definitely a bad thing.

And, obviously, this is driven by private sector wage increases, because public sector wages are increasing by a lot less on average, which will create a stronger pay gap which in turn is likely to drive more people out of the sector.

Yay.

[Woodchopper]

Yes, not good.

European gas prices, global food and oil prices are back down to where they were before the Russian invasion of Ukraine. Supply chain problems caused by the pandemic seem to have eased.

Inflation should be dropping rapidly, as it is in the Eurozone, where its at about half the level that it was at the peak, and is now at about five per cent.

So UK inflation in the summer of 2023 isn't caused by rapidly increasing prices for raw materials.

As mentioned in the article it does appear to be caused by labour shortages. Companies can't hire people and so are having to outbid each other. The problem is that increased pay without improved output (ie no gains in productivity) just leads to price rises and people's pay increases get erroded by inflation, while those on fixed or stagnating incomes see their standard of living fall.

In the short run the government can reduce inflation by causing a recession or skating close to one with zero growth. But long term that's a recipe for lost decades.

Long run the only way out is to either increase the labour force or improve productivity.

[headshot]

If only there was some way the Government could have avoided major labour shortages after the 2019 general election.

[Woodchopper]

If only there was some way the Government could have avoided major labour shortages after the 2019 general election.

Well indeed.

The consequences for the economy of an ageing population with a smaller proportion of working age people have been raised for decades. Too bad that Britain's response to inevitable labour market problems was to cut its self off from migrant labour from Europe.

That said, there would still be problems as labour shortages are being felt across Europe.

[headshot]

I read in the some of the tabloids that there are over 100,000 working age people who could be available for work very soon, if they weren't being forced onto barges or flown to far-off countries.

[El Pollo Diablo]

Yes, not good.

European gas prices, global food and oil prices are back down to where they were before the Russian invasion of Ukraine. Supply chain problems caused by the pandemic seem to have eased.

Inflation should be dropping rapidly, as it is in the Eurozone, where its at about half the level that it was at the peak, and is now at about five per cent.

So UK inflation in the summer of 2023 isn't caused by rapidly increasing prices for raw materials.

As mentioned in the article it does appear to be caused by labour shortages. Companies can't hire people and so are having to outbid each other. The problem is that increased pay without improved output (ie no gains in productivity) just leads to price rises and people's pay increases get erroded by inflation, while those on fixed or stagnating incomes see their standard of living fall.

In the short run the government can reduce inflation by causing a recession or skating close to one with zero growth. But long term that's a recipe for lost decades.

Long run the only way out is to either increase the labour force or improve productivity.

Another factor in inflation is the difficulties in importing stuff. Import costs from the EU are now huge and take ages, and a lot of things have taxes on them now. Construction inflation is still enormous, steel is expensive for example.

[lpm]

https://www.bbc.co.uk/news/business-66501937

Although inflation rose by a higher amount, so real wages fell on average. Again.

And obviously, given the government's insistence that high wage increases drive inflation, this is definitely a bad thing.

And, obviously, this is driven by private sector wage increases, because public sector wages are increasing by a lot less on average, which will create a stronger pay gap which in turn is likely to drive more people out of the sector.

Yay.

You can't really expect real wages to rise during a serious economic crisis. Holding real wages close to neutral is a pretty good result.

Minimum wage, pensions and core benefits increased by 10%, protecting the poorer deciles from the worst of it. That builds the foundation for everyone else.

However there's still the endless distractions in the fight for proper pay, from fussing about ULEZ charges to pleading for subsidies for fossil fuel burning.

In a year or so we will have the Starmer government, determined to embark on a 30 year transformation increase the share of the economy going to labour maintain the status quo.

[El Pollo Diablo]

To be fair, it's hard since Parfitt and Lancaster died. I imagine they'll end up like Trigger's broom.

[jimbob]

https://www.bbc.co.uk/news/business-66501937

Although inflation rose by a higher amount, so real wages fell on average. Again.

And obviously, given the government's insistence that high wage increases drive inflation, this is definitely a bad thing.

And, obviously, this is driven by private sector wage increases, because public sector wages are increasing by a lot less on average, which will create a stronger pay gap which in turn is likely to drive more people out of the sector.

Yay.

You can't really expect real wages to rise during a serious economic crisis. Holding real wages close to neutral is a pretty good result.

Minimum wage, pensions and core benefits increased by 10%, protecting the poorer deciles from the worst of it. That builds the foundation for everyone else.

However there's still the endless distractions in the fight for proper pay, from fussing about ULEZ charges to pleading for subsidies for fossil fuel burning.

In a year or so we will have the Starmer government, determined to embark on a 30 year transformation increase the share of the economy going to labour maintain the status quo.

Blair didn't maintain the status quo. He did quite a lot, some of which only Sunak is getting round to try undoing.

Blair also did a lot wrong but did make a difference.

[monkey]

https://www.bbc.co.uk/news/business-66501937

Although inflation rose by a higher amount, so real wages fell on average. Again.

And obviously, given the government's insistence that high wage increases drive inflation, this is definitely a bad thing.

And, obviously, this is driven by private sector wage increases, because public sector wages are increasing by a lot less on average, which will create a stronger pay gap which in turn is likely to drive more people out of the sector.

Yay.

You can't really expect real wages to rise during a serious economic crisis. Holding real wages close to neutral is a pretty good result.

Minimum wage, pensions and core benefits increased by 10%, protecting the poorer deciles from the worst of it. That builds the foundation for everyone else.

However there's still the endless distractions in the fight for proper pay, from fussing about ULEZ charges to pleading for subsidies for fossil fuel burning.

In a year or so we will have the Starmer government, determined to embark on a 30 year transformation increase the share of the economy going to labour maintain the status quo.

Blair didn't maintain the status quo. He did quite a lot, some of which only Sunak is getting round to try undoing.

Blair also did a lot wrong but did make a difference.

Starmer's stance seems to be "We'll be like them, but better at it. More efficient." Blair went in saying he was going to change stuff.

Might change come election time, but I'm not that excited by Labour right now.

[El Pollo Diablo]

More happy news - rail fares are going to decrease*!







*in real terms

[Lew Dolby]

but still rise by more than most people's pay increases.