UK gov universal pay increase


OK, let's say everyone gets a pay increase.

Immediately every business that employs anyone needs to raise their prices to pay the additional wages.

As a result, everyone is still just as poorly paid in reality even though the numbers on their wage cheques are bigger.

The pound plummets in value compared with other currencies.

Foreign imports become more expensive and so foreign items become more unaffordable and overall quality of life decreases.

People can't afford homes anymore as they can't compete with foreign investors whose foreign money is now worth more pounds than it used to.

Everyone ends up renting from foreign investors, pushing British money out of the country, strengthening other economies and weakening our own.

The pound plummets further.

People can't afford food and heating anymore.

Businesses close because nobody can afford to use them, everyone loses their jobs, and we're into a new Great Depression.

tl;dr nah it wouldn't work marra
 
Benefits up 10% in April as well. Workers getting very little
10% of £60 odd . But you know that. So they’ll get around £67 a week

2% at minimum wage will be more
.

this country is awash with profits in most sectors, which will be filtered away to overseas concerns and hedge funds

some see that as a good thing though and god forbid people near the bottom get 10% of the little they receive

keep voting tory , if you want more money to leave the country, whilst those within the country are demonised as feckless and enemies of the people

it really is that simple
 
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Adding money to the accounts of 5.5 million people would surely make a difference.
But they are no better off in real terms so should maintain the status quo, and its not them driving inflation right now.

The government could tax millions more to pay for the rise which could be considered a deflationary measure.
 
But they are no better off in real terms so should maintain the status quo, and its not them driving inflation right now.

The government could tax millions more to pay for the rise which could be considered a deflationary measure.
They could. And it might cause a recession.

People are not rational creatures so if they feel better off they will spend more. Also the inflation calculation is based on the average, so if what you like to spend your money on isn't more expensive you may well buy more of it, which would increase inflation if the supply didn't increase at the same rate.
 
They could. And it might cause a recession.

People are not rational creatures so if they feel better off they will spend more. Also the inflation calculation is based on the average, so if what you like to spend your money on isn't more expensive you may well buy more of it, which would increase inflation if the supply didn't increase at the same rate.
It's a minor element when inflation is being driven be increased energy/food costs, supply shortages, and currency depreciation, thanks in part to Brexit, Covid and Ukraine.
 
Different services have different budgets. if one service has improved their performance more than another then maybe they deserve a higher rise. Maybe one has a more of a problem recruiting than others or faces tougher competition from the private sector. A flat rate across the board will ignore a lot of factors.
I assumed we were talking about annual cost of living increases.

Since 2010 I’d struggle to think of any service that has improved their performance. This shouldn’t mean that public sector employees don’t receive cost of living pay rises in line with how much cost of living has gone up.

With regards to recruitment, surely that would be a change to pay bands rather than the annual cost of living pay rise? NHS and police are struggling to recruit and retain staff now; yet neither the NHSPRB, nor the PRRB, have made pay recommendations that are likely to make either service more attractive to join or remain in.
 
10% of £60 odd . But you know that. So they’ll get around £67 a week

2% at minimum wage will be more
.

this country is awash with profits in most sectors, which will be filtered away to overseas concerns and hedge funds

some see that as a good thing though and god forbid people near the bottom get 10% of the little they receive

keep voting tory , if you want more money to leave the country, whilst those within the country are demonised as feckless and enemies of the people

it really is that simple

yeah but what are workers getting? footing the bill for everyone else.
 
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The pound plummets in value compared with other currencies.

Foreign imports become more expensive and so foreign items become more unaffordable and overall quality of life decreases.

People can't afford homes anymore as they can't compete with foreign investors whose foreign money is now worth more pounds than it used to.

Everyone ends up renting from foreign investors, pushing British money out of the country, strengthening other economies and weakening our own.

The pound plummets further.
What's caused the pound to plummet in recent years..🤔
 
As I said earlier, I’m not an economist. Does this mean that public sector pay can never rise at the same level as inflation? Wouldn’t this lead to public sector workers facing a real life pay cut every year?
No. It's a balancing act. As you add more money into the system, unless supply increases at the same rate, you get inflation. Too much on either side of the scale at once is bad.

Personally I'd like to look at better pay in the public sector as a trade off for the extremely generous pension contributions.
 
No. It's a balancing act. As you add more money into the system, unless supply increases at the same rate, you get inflation. Too much on either side of the scale at once is bad.

Personally I'd like to look at better pay in the public sector as a trade off for the extremely generous pension contributions.
So how do you decide with the public sector which years they receive above/below/matching inflation pay rises to ensure they haven’t taken real life pay cuts over the span of their careers?
 
So how do you decide with the public sector which years they receive above/below/matching inflation pay rises to ensure they haven’t taken real life pay cuts over the span of their careers?
I doubt we can afford to give a pay rise every year, so you don't.
When you do, you do what companies do. You look at your budgets and guess what you can afford.
 
I doubt we can afford to give a pay rise every year, so you don't.
When you do, you do what companies do. You look at your budgets and guess what you can afford.
I’ll use firefighters as an example here. In 2013 a competent firefighter earned £28776. In 2023 they are on £32244. If pay had matched inflation then the current pay should be £36932.

Over the past 10 years their pay has gone up 12% whereas inflation has been 28% (using CPI data from BoE).

If this firefighter joined at 18 in 2011, becoming competent in 2013 and planned on doing 42 years (good luck) then on current trend their salary would be £45300 when they retire in 2053. If their pay kept up with inflation then it would be £77452. So over the span of their career, their final salary will be about 42% less than what it would be if it had matched inflation.

That generous pension scheme you mentioned will see that firefighter retiring on a pension of £25110 (ironically, that pension will be inflation linked). Whereas if the salary kept up with inflation, then their pension would be £37082. So their pension is roughly 32% less than what it should be.

To compare the 2053 salary to today, it would be like paying a competent firefighter £18000.

Just keep pay in line with inflation!
What's a "cost of living increase"? - I don't think I've ever had one of those.
Good question, I can’t even think what the actual name for annual rise is across the public sector? Police say annual pay award, fire service say pay increase, NHS seem to say pay rise.

Who knows!
 
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Just keep pay in line with inflation!

Good question, I can’t even think what the actual name for annual rise is across the public sector? Police say annual pay award, fire service say pay increase, NHS seem to say pay rise.

Who knows!

My point is that I don't think any job has an automatic inflation increase as the affordability to the employer (whether public, private or "third sector") depends on a number of factors. The RPI/CPI is just an average of a basket of goods and services but everyone's personal experience of the cost of living increase will be different for everyone. Any law which said that everyone should get an inflation matching pay rise would not be sustainable and would itself be inflationary.
 

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