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Home Publications Blogs Beat the Press What Makes a Pay Increase "Inflation Busting?"

What Makes a Pay Increase "Inflation Busting?"

Thursday, 02 January 2014 10:52

That's what readers of a Reuters article on complaints from a German business group must be asking themselves. At one point the article told readers:

"Major unions negotiated inflation-busting hikes in pay checks last year after years of wage restraint, although the Statistics Office said last month real wages across Germany were likely to have fallen in 2013."

It's not clear what the definition of "inflation-busting" is in this context, but it doesn't sound like it involved large pay increases if wages did not even keep pace with inflation. Usually, they would be expected to rise somewhat in excess of inflation to reflect productivity growth in Germany's economy.

Comments (5)Add Comment
written by Ryan, January 02, 2014 1:27
I love how the assertion is separated by the actual and contrasting data with that magical ", although". It seems a reporter were employed to a) not include the phrase before the comma, or b) reconcile the two parts of this sentence. At the very least, might a reporter not wonder what's up and ask someone other than the employer group?
written by Ryan, January 02, 2014 1:39
Also, were these raises inflation busting, wouldn't they weaken the strengthening Euro we were celebrating this morning and lead to greater, not lesser, demand for German exports, as is asserted in the article?
written by djb, January 02, 2014 1:56

they probably meant "inflation control" busting raises

For the higher good
written by John Parks, January 02, 2014 7:23
It reminds me of the early 70's when Nixon appealed to business owners to forego giving out raises for the "sake of the country." It gave the owners carte blanche to argue that it was their patriotic duty to withhold any subsequent wage adjustments.

The only sentiment unsaid was the "Thank you in advance for your contributions."
written by Alex Bollinger, January 02, 2014 9:25
That is one poorly written sentence. I first read the clause starting with "although" as modifying the years of "restraint."

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.