BREXIT - Is This Really Still Rumbling On? 😴
Comments
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The joys of no productivity growth over a decade eh?pblakeney said:
I dare say that there are companies with wide margins but the majority are not.rick_chasey said:
That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.pblakeney said:
There are other ways but companies are forced to increase prices in line with costs.rick_chasey said:
Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.pblakeney said:
You've not ran a business have you?rick_chasey said:
Not necessarilypblakeney said:
Bigger picture being inflation.TheBigBean said:
Being other people's wages?pblakeney said:
Yes, without considering the bigger picture.TheBigBean said:
Wasn't higher wages one of the things some people voted for?briantrumpet said:Even the Telegraph dares to mention Brexit as a factor in the UK's woes:
“The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”
A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.
The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.
Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.
The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.
https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
Higher wages => higher costs => higher prices.
Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
Wages are simply one of those costs. It cannot be ignored as a consequence.
I'd hazard a guess that the majority of SME's are barely getting by.
I think the "companies accepting narrower margins" argument is a little overlooked generally - often firms will do that as wage rises are much stickier than prices or margins, so it is often the last thing they will do.
(an argument for bonuses, by the way)0 -
Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.rick_chasey said:
That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.pblakeney said:
There are other ways but companies are forced to increase prices in line with costs.rick_chasey said:
Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.pblakeney said:
You've not ran a business have you?rick_chasey said:
Not necessarilypblakeney said:
Bigger picture being inflation.TheBigBean said:
Being other people's wages?pblakeney said:
Yes, without considering the bigger picture.TheBigBean said:
Wasn't higher wages one of the things some people voted for?briantrumpet said:Even the Telegraph dares to mention Brexit as a factor in the UK's woes:
“The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”
A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.
The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.
Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.
The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.
https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
Higher wages => higher costs => higher prices.
Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
Wages are simply one of those costs. It cannot be ignored as a consequence.
The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.
So in that instance there is plenty of room for wage growth before you get into wage-led inflation0 -
Companies choose to lower their profits? Supply and demand etc.surrey_commuter said:
Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.rick_chasey said:
That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.pblakeney said:
There are other ways but companies are forced to increase prices in line with costs.rick_chasey said:
Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.pblakeney said:
You've not ran a business have you?rick_chasey said:
Not necessarilypblakeney said:
Bigger picture being inflation.TheBigBean said:
Being other people's wages?pblakeney said:
Yes, without considering the bigger picture.TheBigBean said:
Wasn't higher wages one of the things some people voted for?briantrumpet said:Even the Telegraph dares to mention Brexit as a factor in the UK's woes:
“The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”
A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.
The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.
Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.
The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.
https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
Higher wages => higher costs => higher prices.
Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
Wages are simply one of those costs. It cannot be ignored as a consequence.
The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.
So in that instance there is plenty of room for wage growth before you get into wage-led inflation0 -
might be chasing market shareTheBigBean said:
Companies choose to lower their profits? Supply and demand etc.surrey_commuter said:
Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.rick_chasey said:
That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.pblakeney said:
There are other ways but companies are forced to increase prices in line with costs.rick_chasey said:
Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.pblakeney said:
You've not ran a business have you?rick_chasey said:
Not necessarilypblakeney said:
Bigger picture being inflation.TheBigBean said:
Being other people's wages?pblakeney said:
Yes, without considering the bigger picture.TheBigBean said:
Wasn't higher wages one of the things some people voted for?briantrumpet said:Even the Telegraph dares to mention Brexit as a factor in the UK's woes:
“The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”
A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.
The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.
Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.
The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.
https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
Higher wages => higher costs => higher prices.
Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
Wages are simply one of those costs. It cannot be ignored as a consequence.
The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.
So in that instance there is plenty of room for wage growth before you get into wage-led inflation0 -
Prices rise and fall - it's very hard to reduce people's wages once you've lifted them.surrey_commuter said:
Before wage inflation the company could have chosen to have narrower margins and for whatever reason did not do so. This would suggest it would be a sub-optimal option for them.rick_chasey said:
That also depends on how thick the margins are. The company could chose to have narrower margins rather than raise prices.pblakeney said:
There are other ways but companies are forced to increase prices in line with costs.rick_chasey said:
Maybe I misunderstood but there are other ways to get inflation which don't involve high wages.pblakeney said:
You've not ran a business have you?rick_chasey said:
Not necessarilypblakeney said:
Bigger picture being inflation.TheBigBean said:
Being other people's wages?pblakeney said:
Yes, without considering the bigger picture.TheBigBean said:
Wasn't higher wages one of the things some people voted for?briantrumpet said:Even the Telegraph dares to mention Brexit as a factor in the UK's woes:
“The factor that is really only UK-specific is Brexit. It may not necessarily mean that the inflationary pressures in the UK are much, much bigger than elsewhere. But I think it does mean that more of the inflationary pressures are at risk of lasting longer than elsewhere.”
A shrinking labour force is fuelling inflation, with businesses forced to pay staff more money to attract the talent they need.
The pool of workers available to firms has not bounced back to pre-Covid levels and tighter immigration controls have cut the supply of cheap labour from Europe.
Adam Posen, a former Bank of England rate-setter, believes this helps to explain more than half of the difference between UK and eurozone inflation. Ministers remain reluctant to use immigration to solve worker shortages.
The inflation shock is a global phenomenon but UK households may need to prepare for price pain that is longer and worse than almost anywhere else.
https://www.telegraph.co.uk/business/2022/05/16/britain-facing-severe-cost-living-crisis-countries/
Higher wages => higher costs => higher prices.
Also, some people are more productive which is why their wage is rising, so their costs per unit are not necessarily higher, so it may not involve higher prices.
Wages are simply one of those costs. It cannot be ignored as a consequence.
The opposite is what is happening in the US. If you look at the price breakdown, prices are climbing rapidly, as are company profits, but wages are not matching.
So in that instance there is plenty of room for wage growth before you get into wage-led inflation0 -
I don't think negative inflation is a prospect worth worrying about any time soon.0
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From an economics viewpoint Brexit really is a fascinating experiment.
We now have record low recorded numbers of unemployed and they are outnumbered by the number of vacancies.
On the other hand the number of people in employment has not recovered to pre-pandemic levels.0 -
Lowest unemployment level since 1974 I think they said on the radio.
You would think wages have to rise as vacancies exceed the number unemployed or those vacancies will remain vacant.0 -
Just posted this on the other thread - it's mad, the labour market is as tight as it's ever been yet real wages are still falling substantially. It's crazy.Dorset_Boy said:Lowest unemployment level since 1974 I think they said on the radio.
You would think wages have to rise as vacancies exceed the number unemployed or those vacancies will remain vacant.0 -
Wages will have to rise to fill the vacancies.
That doesn't mean wages will rise at the same rate as inflation currently is running at.
And the general expectation is the current very high (by the standards of the last 25 years) inflation is transitory.0 -
Not necessarily for all of that.
Firms can only afford what they can afford and if the shortage is inflexible (Brexit doesn't help this) those vacancies can just be left unfilled as that may be more optimal than paying more than firms can afford.
If say, the global competitive market determines the market price,, and the firm's other costs are fixed there is a ceiling for for a firm can pay for a role to make sense.
If the shortage means that the labour market price is above that ceiling, why bother making the hire?
I think the high level of vacancies and the lack of real wage rises are partly a function of a skills missmatch which is partly a Brexit transition problem. To take a trivial example, if there are 80 dentists but the economy demands 100 dentists, there will always be 20 vancancies in the short term, regardless of the price, until more dentists are trained.
This is what people mean when they say leaving the EU single market makes the whole economy less efficient.
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ONS. Real wages are rising.Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.
Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.
In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.1 -
Yeah so when we say real wages - that is regular pay, right? That is why all the headlines say "real wages fall 1.2%"
If you break it down further you can see the growth in total pay comes mainly from bonuses which are massively supercharged by financial services which is experiencing a boom not seen since pre-crash days (which is not sustainable...!)0 -
A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.0
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Wage graph.
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I do love ONS.0
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Mean or median?TheBigBean said:A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.
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For public sector employees, the wage growth of 1.6% is bad news.0
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10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.0
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So look, I spend most of my time parroting economists who do this for a living.TheBigBean said:10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.
It is general practice to refer to the previous high when talking about growth, right?
So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.
By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.0 -
If you run a professional services SME, you'd count being able to give above inflation pay rises while still turning a profit as something of a success.rick_chasey said:Lol that’s what, 2% over 14 years?
1985 Mercian King of Mercia - work in progress (Hah! Who am I kidding?)
Pinnacle Monzonite
Part of the anti-growth coalition0 -
Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.rick_chasey said:
So look, I spend most of my time parroting economists who do this for a living.TheBigBean said:10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.
It is general practice to refer to the previous high when talking about growth, right?
So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.
By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
There has been 8 years of real wage growth. It is nonsense to claim otherwise.0 -
No economist refers to post-crash recovery as growth. For very obvious reasons.TheBigBean said:
Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.rick_chasey said:
So look, I spend most of my time parroting economists who do this for a living.TheBigBean said:10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.
It is general practice to refer to the previous high when talking about growth, right?
So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.
By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
There has been 8 years of real wage growth. It is nonsense to claim otherwise.0 -
Mean, I believe. See the comparison chart which shows it doesn't make much difference on a relative basis.kingstongraham said:
Mean or median?TheBigBean said:A quick graph shows real wages have largely been increasing since March 2014. Bonuses or not it is all pay.
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/methodologies/comparisonoflabourmarketdatasources0 -
As I said in the other thread, I'd love to know who is getting 8.2% rises. My thinking is it is only being done by people moving companies. I could get around 15-20% more if I made a move to similar roles I've seen advertised but I've gone beyond the mving for extra salary stage, any future move I make will be for the type of work and the work / life balance and will possibly require a reduction in salary.TheBigBean said:ONS. Real wages are rising.
Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.
Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.
In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.0 -
Your current employers may become worried if people leave and therefore bump your salary.Pross said:
As I said in the other thread, I'd love to know who is getting 8.2% rises. My thinking is it is only being done by people moving companies. I could get around 15-20% more if I made a move to similar roles I've seen advertised but I've gone beyond the mving for extra salary stage, any future move I make will be for the type of work and the work / life balance and will possibly require a reduction in salary.TheBigBean said:ONS. Real wages are rising.
Growth in average total pay (including bonuses) was 7.0%, and growth in regular pay (excluding bonuses) was 4.2% among employees in January to March 2022.
Average total pay growth for the private sector was 8.2% in January to March 2022, and for the public sector was 1.6% in the same time period; the finance and business services sector showed the largest growth rate (10.7%), partly because of strong bonus payments.
In real terms (adjusted for inflation) in January to March 2022, growth in total pay was 1.4% and regular pay fell on the year at negative 1.2%.0 -
By that rationale should they not refer to a crash either as it only reverse years of strong growth?rick_chasey said:
No economist refers to post-crash recovery as growth. For very obvious reasons.TheBigBean said:
Why make reference to a peak that wasn't sustainable? So much so that it causes a massive recession.rick_chasey said:
So look, I spend most of my time parroting economists who do this for a living.TheBigBean said:10.2% or 5.5% since March 2014 (total/regular). It really does not support your narrative that real wages have been falling. They did fall after a big recession.
It is general practice to refer to the previous high when talking about growth, right?
So the previous high was 2008 - real wages have barely crept above that over 14 years, around 2% according to your own chart.
By contrast, the previous decades saw around 1 and a half to 2 and a half, *per year* on average.
There has been 8 years of real wage growth. It is nonsense to claim otherwise.0
