From City AM:
REAL wages are still falling, on average, and nobody seems to know what to do about it…
There is a growing body of evidence – including an excellent new report from Towers Watson – that shows that rising non-wage employment costs are crowding out wages and are the primary structural cause of depressed wages.
Employers are paying more to employ people – but the staff aren't noticing because hidden taxes and especially employer pension contributions are crowding out wage hikes…
As the Towers Watson paper shows, this represents a transfer from those without pensions or with defined contribution pensions – typically low income or younger workers – to those with final salary pensions – older workers and pensioners.
I don't believe in generational warfare, but young people struggling to afford housing are also taking a pay cut to finance generous pensions of a sort that will never be accessible to them.
It's grim. Auto-enrolment will cut pay packets further in the years ahead.
As per usual, as long as Heath sticks to facts, figures and micro-economics, he makes good sense. He glosses over the fact that price-inflation is a deliberately engineered by governments to help transfer wealth from savers to landowners, and to act as a handy ex post justification for Home-Owner-Ism ("It's the only asset which beats inflation"), but hey.
One thing which is not clear, and probably not to him either, is his throwaway remark "I don't believe in generational warfare".
Does he mean he doesn't believe it exists (as in "I don't believe in God") or does he accept that it exists (having just provided plenty of evidence for it) but that he thinks it is A Bad Thing (as in "I don't believe in capital punishment")?
Monday, 9 December 2013
From City AM: