Are we starting to see the wage increase vs inflation increase death spiral?

Zenduri

Zenduri

Zenduri

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Firstly this isn't a thread to discuss if pay increases are deserved or are a reasonable request given working conditions or lack of historic increases as thats a whole new topic to go down.

However, it's to discuss the fact we are seeing more industries striking for better pay of demanding better pay in the last 4-8 weeks citing inflation and the cost of living as one of the primary reasons. While it is understandable to demand more pay during a time of inflation this in itself has the risk of pushing up labour costs and therefore prices which in turn, in theory pushes up inflation even higher, wiping out the pay increase and generate more demand for even higher wages


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A few examples of recent increases and demands are below

Given:
Sainsburys workers 5.3% increase
PWC 7-9% increase

Rejected/Demanded/Disputed:

Barristers 15% pay increase demanded
Doctors 30% over 5 years demanded
Royal mail offered 2%, offerered 5.5%, rejected both demanding higher
Rolls Royce £2000 payment offered and rejected, 4% increase rejected
Railworkers offered 2% and 4% rejected, 7% demand
British Airways demands 10% increase but only to restore this to pre covid levels
Ryan Air (unsure of demands)


Does anyone think we are on the cusp of a wage/inflation death spiral? Are we expecting more and more industries and workers to start demanding more pay? If so, what is your take on the situation and if you dont think we are at the risk of entering this spiral whats your thoughts on how we are/will avoid(ing) this?
 
Rroff said:
Something is gonna have to give.

I got a pay rise March/April this year and already it has been cancelled out by the increased cost of living so I'm essentially back where I was.
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I received 4% but that was after 3 years of 0% and the 9% inflation still means im worse off
 
eddiemcgarrigle said:
Thing is though, inflation and high prices where already here before the recent demand for higher wages. Wage demands did not cause this.
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The theory is the spiral starts with inflation due to X internal or external factorswhich then triggers the initial demand for a pay increase to cope with the inflation and then it becomes self fulfilling. You could argue we have seen the inflation from energy, fuel and food prices in part due to the ukraine crisis and now we are seeing the first glut of demands for pay increases to cope.

Of course the spiral is a theoretical model and not a written rule but in a way it does feel like we entering cycle 1 of the spiral
 
alec said:
Oh, so its fine for banks to do QE for years
Its fine for companies to raise prices, can't lose those profits
Energy price increases purely from political decisions, fine

Workers asking for wages, not for increase, just to keep up with inflation - DEATH SPIRAL!
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Congrats on not reading my OP and moving straight to rage posting. I specifically said this isnt a thread about who deserves pay increases and what percantage, this is about the theory that with high inflation comes higher and more frequent wage demands which can trigger even higher inflation.
 
alec said:
In this chicken and egg, inflation came first.
Was trying to say that Death Spiral is already here and it was not caused by wage demands. Despite feeble attempts of shifting the blame.
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See here No-one is trying to shift the blame of inflation to wage demands, it does appear IMO we are slowly entering the 2nd step of the cycle though
 
200sols said:
If you recieved 0% for the last few years you've been taking a real terms pay cut for a long time. Many others have too, no wonder productivity is low in this country.
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I was on 0% for 3 years and i think over those years inflation totalled 4.3%, i then got 4% this year which means im down .3% over the last 4 years plus 9.1% this year.

However, fortunately my living standards haven't degraded yet, i've been able to clear some long term debt earlier this year so my disposable or "buffer" income has gone up slightly but that will be eaten away once my fixed energy contract end in October and the CPI price increase on some utilities since April has already eaten into some of the funds too.
 
chroniclard said:
People are not necessarily shouting and screaming to help themselves, many of us are doing ok thanks, many of us want a better run country. Were not going anywhere, we like the UK in the whole we just think it could be better. One of the steps to that is a better government.
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You could argue many are in fuel poverty as well as normal poverty and they aren't doing very well. Food bank usage is rocketing and don't let personal circumstances taint your view
 
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