The reluctance of trade unions
to accept some sort of one-off payment in recognition of the high level of
inflation this year is understandable. One year’s 10% inflation doesn’t
disappear if inflation halves in the next year, it merely becomes part of the
next year’s base level of prices. So, if inflation is 10% one year and 5% the
next, when we take into account the wonder which is compounding, it needs a
total increase in pay of 15.5% over the two years just to keep pace with the
cost of living. And that’s without even considering the extent to which pay
fell behind prices in the years before that. Suspicion of a non-consolidated
payment for one of those years is entirely justified.
The government are making a
great play of the idea that they are getting the cost of living under control
by reducing the rate of inflation, but a reduction in the rate of inflation when
wages continue to lag behind prices doesn’t ‘solve’ anything. It merely slows
the rate at which people fall behind. “We will slow the rate at which you get
poorer” isn’t the catchiest of election slogans, yet that is the best that
the current government is effectively offering. Far
from regretting that people do not have a proper command of mathematics,
government policy on pay depends on the assumption that people don’t understand
that reducing inflation in itself is not enough. They may find that people’s
understanding of basic mathematics as it directly affects them is rather better
than they might wish. Voting to be impoverished more slowly is not the most
attractive proposition.
Posts
1 comment:
Oddly enough I wrote a brief comment on this very matter which is glaringly obvious earlier today. Somehow it was judged as unacceptable by the online publication. Funny old world, innit. Seems like the new orthodoxy demands that we accept a decline in the rate of inflation as a real improvement. Suggests a great need for the teaching of arithmetic to people well into their adult lives. Or an eradication of various puddles of groupthink.
Post a Comment