I understand that there are shareholders and costs increase, but surely the cost increases should be at the rate of inflation?
I know a load of companies increase by like 3.9% + Inflation every year – so why is it that when employees get pay rises they’ll always be less than the rate of inflation?
Doesn’t that just mean employees get poorer every time? Where does the extra 3.9% money actually go? Where does the difference between employees payrises and rate of inflation go?
Are all companies just screwing their employees or is there some other reason I’m not realizing?
In: Economics
When it comes to capitalism and unethical (but profitable) behaviour, the question you must ask is: “What would make the company *not* do the bad thing?”.
So, what would make a company give employees a raise generally? They want to keep their employees.
So, why not give them a raise to match inflation? They do not think they will lose their employees if they fail to give them an appropriate raise.
After all, if they can get away with paying their employees less (adjusted for inflation), that’s money in the bank, money for the shareholders, money for the chief execs. A company will always pay their employees the smallest amount they believe they can get away with. And if they know that other companies are also not giving substantial raises, then there is nowhere for their employees to go to try and get a better wage anyway!
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