The problem with inflation is that the rise of the salaries is increasing the rise of the prices. Sometimes the labor union has mentioned as the thing that increases inflation. The reason for that is it wants to rise the lowest salaries. The problem is not in the rising the lowest salaries. The problem is when the lowest salaries are rising that thing causes the situation. That for some unknown reasons also all other salaries must raise when the cleaner's salaries are rising.
This kind of effect is a remarkable thing in work marketing. When the lowest salaries are rising, all other salaries must also rise. And that thing causes that the prices are also rising. The question is why only the lowest salaries cannot be rise and others would remain at the same level? And the interesting thing is this. When some cleaner would get 3-4% rise in the salaries all other actors must get the same money.
That is an interesting thing. If all salaries rise 3-4%, that thing causes that the markets would transfer that thing at the prices of products. So that thing means that the rise of the payments would transfer, straight to the prices of products. And the thing is that this kind of rise in salaries doesn't have an effect. When the prices will rise the same way with salaries.
It means the real increase of the purchasing power is zero. And if there is the increasing the taxes. That thing can mean that the rise of salary would turn to negative purchase power. So when we are looking at the things that are discussed in the financial discussions between employers and labor unions we should look at entirety.
The retail actors are transferring the rising salary paychecks to the prices of products. And of course, raising taxes must notice. When we are calculating the effect of raising salaries on the purchasing power. The purchasing power means how much goods the actor can buy. Many things are affecting that thing. One is the value of the purchase, and the second is the level of the prices.
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