Companies benefiting from the economic recovery must pay their long-suffering workers more next year, the head of the CBI in an unprecedented attack on firms he accuses of keeping “far too many people stuck in minimum-wage jobs”.
John Cridland, director-general of the CBI, Britain’s biggest business lobby group, will criticise many of the 240,000 companies he is paid to represent for failing to pass on their new-found prosperity to employees. He will tell employers – who in the FTSE 100 are paid 136 times the national average – that they must ensure that all citizens benefit from the recovery.
In an unusually forthright new year message, Cridland says businessmen and women must do more to help those paid the least. “The recovery is taking root and business leaders have a spring in their step compared to this time last year, but this is no time to rest on our laurels,” he will say in his annual message to business leaders. “As the financial situation of many firms begins to turn a corner, one of the biggest challenges facing businesses is to deliver growth that will mean better pay and more opportunities for all their employees after a prolonged squeeze.”
Pay isn’t determined by how profitable a company is….if it were then when a company makes losses then all should get pay cuts, yes?
Rather, pay is determined by the alternative employment opportunities, and the wages there, that the workers have. Which, in a time of high unemployment ain’t much.
But as unemployment falls then those alternatives get better and pay rises will quite naturally start to rise above the inflation rate.
This is something that we can quite happily leave to the market unadorned.
It’s also worth noting that all economists agree that the recent falls in real wages are what has stopped the unemployment rate from exploding……which is an interesting point of agreement. For the flip side of that is that of course rising wages have unemployment effects.
So, next time you see someone saying that a rise in hte minimum wage will have no employment effect, try and find out their views on the above. If falling wages reduce unemployment then why won’t mandated higher ones cause it?