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https://archive.is/kuMf0 https://archive.is/kuMf0 > Last year Andrew Bailey, governor of the Bank of England, asked workers to “think and reflect” before askin

by mhitza 3y ago

https://archive.is/kuMf0 https://archive.is/kuMf0 > Last year Andrew Bailey, governor of the Bank of England, asked workers to “think and reflect” before asking for pay rises. I literally laughed out loud. Everybody should have been asking for pay raises the last two years for at least enough to cover the inflation rate.

gdcbe 3y ago
Makes me glad I live in a country where pay raise to match inflation (at a minimum) each year is mandatory by law. Allows us to ask for actual pay raises on top of that.
- jsdeveloper 3y ago
  which country is that?
  - cl0ckt0wer 3y ago
    looks like Belgium, Spain, France, Cyprus, Luxembourg, Malta and Slovenia https://www.ecb.europa.eu/pub/pdf/other/mb200805_focus05.en.pdf https://www.ecb.europa.eu/pub/pdf/other/mb200805_focus05.en....
    - peter-m80 3y ago
      Definitely, not Spain
- sib 3y ago
  That seems like an effective way of creating self-reinforcing inflation.
  - sn0wf1re 3y ago
    Only if productivity stagnates, which it hasn't been in most industries.
  - lesuorac 3y ago
    If by self-reinforcing you mean run-away then the math doesn't work out. For nearly any Good / Service the price is not 100% labor. This means that if a price index (PI) goes up 2% and that causes a 2% increase in labor prices those labor prices will have a <2% increase in that PI. Lets be generous and say it has a 1% increase in that PI. That 1% increase will cause a 0.5% increase in the next PI iteration and next time it's a .25% and will effectively become 0% as the number of iterations increases. The fact that prices aren't 100% labor is also why when looking at minimum wage increases the cost of a good doesn't increase by the same amount that minimum wage does. i.e. increasing minimum wage 20% (historically) doesn't increase a PI by 20%.
- deleted 3y ago
  [deleted]
- thunky 3y ago
  > pay raise to match inflation (at a minimum) each year is mandatory by law So it's illegal to give someone a pay cut? I guess they lay them off instead, but probably that is a legal issue too? Luckily going out of business is perfectly ok (I assume), as well as never starting a business in the first place.
- deleted 3y ago
  [deleted]
MuffinFlavored 3y ago
> Everybody should have been asking for pay raises the last two years for at least enough to cover the inflation rate. And your employer reserves the "right" to be ungrateful/not appreciate you/take a stance in negotiation to try to protect their bottom line and say "no". If inflation happens, then you ask your employer to give you a raise, and they say yes, and they then pass the difference along (increased payroll cost) to their customers through increased prices of goods and services, that creates more inflation. https://en.wikipedia.org/wiki/Wage-price_spiral https://en.wikipedia.org/wiki/Wage-price_spiral
- crmd 3y ago
  Wage-price spirals only happen when business owners refuse to adjust down their operating margins and instead pass the increased payroll costs on to their customers. Too much economic value is accruing to capital and not enough to labor. This is what needs to change.
  - ryandrake 3y ago
    Also: If companies could increase profits by raising prices, they would do so, regardless of what their wages were. The whole "we'll pass along prices to consumers" threat is empty. If companies could simply raise prices, they would (and they do, when they can).
    - seanmcdirmid 3y ago
      Isn't the same true with labor? If they can get more money for their work, they will ask for more money or quit and find a job that pays more? At least, that is what seems to have been happening for the last couple of years. The only problem with that is that finding a new job kind of sucks and is risky.
- A4ET8a8uTh0 3y ago
  You know, as a much, much younger person I actually thought that there is not even a reason for raises ( I had no concept of inflation ) if you are doing the same thing over and over. Eventually, I saw just how much an average manager makes and I realized that it is literally a zero sum game. Management just gets a bigger slice if they manage to somehow bamboozle its workforce so there is a big incentive to do just that regardless of whether it sounds stupid or is even based on facts. More amusingly, I never saw a manager pass on an increase 'to not fuel inflation' further.
Sohcahtoa82 3y ago
> > Last year Andrew Bailey, governor of the Bank of England, asked workers to “think and reflect” before asking for pay rises. Yeah, pay raises aren't good for shareholder value. Besides, we all know the CEO deserves all the money. They do all the work, why shouldn't they reap all the profits? (/s for those that need it)
soco 3y ago
Okay I thought and reflected now where's my pay rise?
yread 3y ago
His pay did stay the same, so at least he's not preaching water while drinking wine... https://www.bankofengland.co.uk/freedom-of-information/2022/questions-about-the-governors-pay https://www.bankofengland.co.uk/freedom-of-information/2022/...

by mhitza 3y ago

gdcbe 3y ago

Makes me glad I live in a country where pay raise to match inflation (at a minimum) each year is mandatory by law. Allows us to ask for actual pay raises on top of that.

jsdeveloper 3y ago
which country is that?
- cl0ckt0wer 3y ago
  looks like Belgium, Spain, France, Cyprus, Luxembourg, Malta and Slovenia https://www.ecb.europa.eu/pub/pdf/other/mb200805_focus05.en.pdf https://www.ecb.europa.eu/pub/pdf/other/mb200805_focus05.en....
  - peter-m80 3y ago
    Definitely, not Spain
sib 3y ago
That seems like an effective way of creating self-reinforcing inflation.
- sn0wf1re 3y ago
  Only if productivity stagnates, which it hasn't been in most industries.
- lesuorac 3y ago
  If by self-reinforcing you mean run-away then the math doesn't work out. For nearly any Good / Service the price is not 100% labor. This means that if a price index (PI) goes up 2% and that causes a 2% increase in labor prices those labor prices will have a <2% increase in that PI. Lets be generous and say it has a 1% increase in that PI. That 1% increase will cause a 0.5% increase in the next PI iteration and next time it's a .25% and will effectively become 0% as the number of iterations increases. The fact that prices aren't 100% labor is also why when looking at minimum wage increases the cost of a good doesn't increase by the same amount that minimum wage does. i.e. increasing minimum wage 20% (historically) doesn't increase a PI by 20%.
deleted 3y ago
[deleted]
thunky 3y ago
> pay raise to match inflation (at a minimum) each year is mandatory by law So it's illegal to give someone a pay cut? I guess they lay them off instead, but probably that is a legal issue too? Luckily going out of business is perfectly ok (I assume), as well as never starting a business in the first place.
deleted 3y ago
[deleted]

MuffinFlavored 3y ago

> Everybody should have been asking for pay raises the last two years for at least enough to cover the inflation rate. And your employer reserves the "right" to be ungrateful/not appreciate you/take a stance in negotiation to try to protect their bottom line and say "no". If inflation happens, then you ask your employer to give you a raise, and they say yes, and they then pass the difference along (increased payroll cost) to their customers through increased prices of goods and services, that creates more inflation. https://en.wikipedia.org/wiki/Wage-price_spiral https://en.wikipedia.org/wiki/Wage-price_spiral

crmd 3y ago
Wage-price spirals only happen when business owners refuse to adjust down their operating margins and instead pass the increased payroll costs on to their customers. Too much economic value is accruing to capital and not enough to labor. This is what needs to change.
- ryandrake 3y ago
  Also: If companies could increase profits by raising prices, they would do so, regardless of what their wages were. The whole "we'll pass along prices to consumers" threat is empty. If companies could simply raise prices, they would (and they do, when they can).
  - seanmcdirmid 3y ago
    Isn't the same true with labor? If they can get more money for their work, they will ask for more money or quit and find a job that pays more? At least, that is what seems to have been happening for the last couple of years. The only problem with that is that finding a new job kind of sucks and is risky.
A4ET8a8uTh0 3y ago
You know, as a much, much younger person I actually thought that there is not even a reason for raises ( I had no concept of inflation ) if you are doing the same thing over and over. Eventually, I saw just how much an average manager makes and I realized that it is literally a zero sum game. Management just gets a bigger slice if they manage to somehow bamboozle its workforce so there is a big incentive to do just that regardless of whether it sounds stupid or is even based on facts. More amusingly, I never saw a manager pass on an increase 'to not fuel inflation' further.

Sohcahtoa82 3y ago

> > Last year Andrew Bailey, governor of the Bank of England, asked workers to “think and reflect” before asking for pay rises. Yeah, pay raises aren't good for shareholder value. Besides, we all know the CEO deserves all the money. They do all the work, why shouldn't they reap all the profits? (/s for those that need it)

soco 3y ago

Okay I thought and reflected now where's my pay rise?

yread 3y ago

His pay did stay the same, so at least he's not preaching water while drinking wine... https://www.bankofengland.co.uk/freedom-of-information/2022/questions-about-the-governors-pay https://www.bankofengland.co.uk/freedom-of-information/2022/...