The Governor of the Bank of England Andrew Bailey has received heavy backlash in the wake of telling Britons they ought not demand an increase in salary this year, even as the nation wrestles with its greatest cost of living in many years.
Interestingly, British Prime Minister Boris Johnson and workers unions have been among those to censure his remarks.
Bailey told the BBC last week that businesses should assert “restraint” in pay negotiations to help battle 30-year high inflation.
As per Andrew Bailey, workers ought not pressure their bosses into raising their wages as the economy needs an ideal opportunity to recalibrate in the midst of high inflation.
He said that while it would be quite painful for workers, some “balance of wage rises” is expected to keep inflation from becoming settled in.
Bailey’s remarks is equivalent to the economic hypothesis that rising wages lead to higher inflation.
As wages go up, so too does the cost of producing goods and services, driving organizations to charge buyers more, in this way blowing up average cost for basic items. In an all around inflationary climate, that could prompt an endless loop known as the “wage-price twisting” – a peculiarity that Britain experienced during the 1970s.
Such worries incited the Bank to raise interest rates to stem inflation, which is estimated to hit 7.25% in April 2022, and align it closer with its 2% benchmark. In any case, the Governor’s remarks propose that workers ought to be proactive, as well, to keep away from additional acceleration.
However, Bailey’s remarks were viewed as terribly harsh, especially when his most recent yearly pay packet was worth more than $777,115 – multiple times the U.K. average for a full-time worker.
England is currently battling high cost of living, with household finances already stretched and post-tax incomes forecast to fall 2% this year.
A spokesperson for Boris Johnson dismissed Bailey’s calls for wage limitation, saying it’s not the government’s job to “educate the essential course or the executives regarding privately owned companies.”
Meanwhile, unions the nation over, hit out at what they considered to be Bailey’s musically challenged remarks.
The general secretary of the pan-industry GMB trade union, Gary Smith said:
“Telling the hard-working people who carried this country through the pandemic they don’t deserve a pay rise is outrageous”
According to Mr Bailey, NHS workers, refuse collectors, shop workers and more should just swallow a massive real-terms pay cut at the same time as many are having to choose between heating and eating.