Recently,
British Chancellor of Exchequers, George Osborne announced many measures to
pull the British economy out of depression. Among others, these measures
included :
Ø Starting
2013, 1 % cap on Public Sector pay for 2 years, once the current two-year
pay freeze ends
Ø Plans
to raise the state pension age from 66 to 67 would be brought forward by 8
years to 2026
Ø 1
billion pound scheme to subsidize work placements for the young unemployed
Despite
these measures, unemployment is expected to rise from 8.2 % this year to 8.7 %
next year
Job
losses in public sector would nearly double to 710,000 , compared to earlier
estimate of 400,000
Questions
to be debated :
Ø If
British Govt can impose a pay freeze for 4 years in Public sector, should
British private sector follow suit ?
Ø To
keep wage-costs under control, should employers be allowed to hire temporary / contractual
staff on a fixed salary for , say , 2 years ?
Ø Will
that encourage employers to hire more people ?
Ø Can
inflation be better controlled thru a pay freeze ( less money in people’s
pockets ), rather than thru hikes in interest rates ?
Ø Since
salaries / wages are a major input-cost, can such freeze hold the production
costs constant ?
Ø Will
pay freeze lead to a “ low cost “ economy , making British products much more
competitive internationally ?
Ø If
this “experiment “ is successful, can it possibly lay the foundation of a
National Wage Policy which pegs maximum annual wage-increase percentages
to 90 % of the rise in the Consumer Price Index of the preceding year, for
both, the private and the public sector employees ? Can such mechanism , set in
motion , a “ Virtuous Circle
“ ?
Ø Can such a policy
automatically control inflation without haphazard / half-cooked external
interventions by Central Banks ?
Only
history will decide whether George Osborne was a villain or a hero !
With
regards
hemen
parekh
No comments:
Post a Comment