Is There Nothing Brexit Can’t Do? It’s Forcing Wage Rises Now

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There is, as we know, a never ending list of terror. The dastardly things that Brexit will cause. What tends to get missed is that near nothing is one sided – that silver lining and clouds thing – and also that some of the things being complained about are things we positively desire.

Take this:

Employers are struggling to fill jobs after an “abrupt fall” in the number of EU nationals working in the UK in the wake of the Brexit vote, new figures show.

The latest quarterly labour market outlook from the CIPD and Adecco Group shows that while the short-term outlook for employment remains strong, labour and skills shortages “are finally starting to bite”, with applications dropping across the board.

The number of EU-born workers in the UK increased by just 7,000 between the first three months of 2017 and the same period in 2018, compared with an increase of 148,000 from the year before, a fall of 95 per cent.

No, it’s not a fall of 95%, it’s a slowing in the rate of increase. But think on a little more. What was it Marx told us about rising wages?

Ah, yes, that’s it. In the presence of a reserve army of the unemployed then employers don’t have to raise wages, do they? They can just add to their workforces by taking in some of those starving waiflings. Here, those EU workers are indeed that reserve army. That availability of tens of millions of Poles, Romanians, Bulgarians, does mean that British employers don’t need to raise wages even while we’ve the lowest unemployment rate in decades. Because those potential workers aren’t here to be counted a unemployed. As yet.

The number of people applying for the average low-skilled vacancy has fallen from 24 to 20 in the past year and from 19 to 10 for medium-skilled posts.

Half of organisations with recruitment problems said they had increased starting salaries in response.

An there’s the other half of Marx’s analysis. That reserve army won’t be tempted so therefore wages do need to rise.

Wage growth has remained stubbornly slow in the UK, despite record-low unemployment which normally forces businesses to raise salaries.

The CIPD’s research found that more than half of employers who had found it harder to recruit have boosted salaries to attract the right staff.

We’re upset about rising wages for British workers are we? No, didn’t think so. Thus, is there nothing Brexit cannot do? It appears that leaving is going to make the labouring classes better off.

An interesting point to add here. We’re told that immigration doesn’t reduce wages. But it seems that the absence of it raises them. Interesting that, isn’t it?

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I’ve never understood the thing about rising wages. I mean nominal wages rise, sure, but then businesses pass along the cost of those higher wages with higher prices, leaving real wages unchanged. Then you get a wage/price spiral. Incidentally, real wages rose throughout the Great Depression. While nominal wages fell, prices fell faster than wages, which meant real wages were rising. [Quote] Perhaps more significant, and more puzzling, than the behavior of the workweek, was the behavior of the real wage. My paper with Powell showed, for the industry data set used also in this paper, that real wages were… Read more »