Professor David Spencer featured in The Conversation
Professor David Spencer explores the current issues around inflation and wage increases in an article for The Conversation.
The article entitled ‘Wages: why are they not keeping up with inflation?’, was published on 31 May 2022 and discusses the concern around rising inflation in recent months not being matched with wage inflation.
Professor of Economics and Political Economy, David Spencer, notes that central banks in the UK and other countries are fighting inflation with raised interest rates and efforts to reverse the “money creation” that they were doing under quantitative easing. He adds:
With inflation forecast by the Bank of England to peak at around 10% in the next few months, this policy approach looks less and less convincing. Rather, new policies are needed to ensure that wages catch up with headline inflation, especially if workers are not to suffer economic harm.
And on the topic of rising energy prices and soaring energy bills, Professor Spencer welcomes the (belated) offering of direct financial support to the least well-off in society whilst noting:
It is concerning that the support payments are one-offs. Will the government offer new cash transfers in the future if energy prices keep on rising? Its fiscally conservative instincts are likely to prevent this from happening. In any case, support payments do not help raise wage inflation to levels that match headline inflation. This would be easier to achieve if workers had greater bargaining power.