Err, yes, and?

Despite record profits this year, and 9% dividends to shareholders, Heinz managers are using the broad context of ‘austerity Britain’ to hold down wages below inflation, having imposed a pay freeze in 2009 because of ‘uncertainty’ about the international economy.  This includes explicit comparison to the low wage settlements across the UK, including the public sector, in a convenient reversal of the government-pushed line that the public sector has it cushy compared to the private.

Wages are not set by the worker\’s current occupation. They are set by the wages that worker could be earning elsewhere. By the worker\’s possible alternative occupations.

This is why hairdressers earn £10 an hour in England and thruppunce ha\’penny in China, because the alternative jobs that the people in England could be doing pay around £10 an hour and the alteratives in China pay spit.

So, yes, of course, if everyone elses\’ wages are being held down/reduced/compressed, then so will those at a factory that is actually making profits.

7 comments on “Err, yes, and?

  1. “9% dividends” means what? Dividend yield? If it’s that high then the shareholders think lean times are coming.

  2. The majority of hairdressers in China earn a respectable wage, not only because they are not that cheap (speaking from experience) but also because hairdressers often moonlight at prostitution as well; go to any “normal” chinese town, and the only places usually open at 0200 are hairdressers with the ubiquitous blue smoked windows and with some bored looking girls hanging about inside….

  3. The majority of hairdressers in China earn a respectable wage, not only because they are not that cheap (speaking from experience) but also because hairdressers often moonlight at prostitution as well

    Cut and blowjob?

  4. Is there some reason – there may well be, I’m not trying to be a dick – why the market rather than company performance is appropriate for workers’ wages but not chief execs?

    http://timworstall.com/2010/10/30/on-the-soaring-pay-of-chief-executives/

    Or is it simply that if a chief exec increases profits (as that is their specific task) their market value increases?

    Tim adds: Chief execs pay is also determined (for a certain value of “determined”, ie, it influences at least) by their alternative employment. If every other CEO is getting paid £100,000 a year then no one is going to pay just one of them £5 million. But if all CEOs are getting £5 million then you’re not going to attract those capable of being a CEO with £100,000.

    Indeed, this is one of the major complaints about CEO pay….that they’re all jamming up wages for CEOs which is why CEOs get high wages.

  5. And remuneration committees packed with people who’d like you to sit on their remuneration committes have got noting to do with it, I suppose.

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