Originally posted by pocketpig II:
i think we can do nothing but pay and pay and pay until protest and riot starts...
to be frank.... no body likes a price increase in anything... be it goods or services as it represent a lost of purchasing power if salary remains the same.
Yet... in this stupid world that we live in... prices always tends to go up... whereever you live... and the only time when prices would come down would be through either price control ( bad stuff... most economist will scream at the idea) or during a depression ( also bad stuff if not worst... as it means many would be out of jobs) OR in the event of lower cost of production due to economies of scale or technological breakthrough in manufacturing... ( aka... increase productivity....which dont happened that often enough)
In the real world... wages usually do not come down... in fact... it always goes up... the economist call it the downward rigidity of wages... As such... the govt idea of a MVC in wages is aimed at hitting that downward rigidity of wages.... to prevent wages from going upward incessantly in the future... or if it does continue to go up... it will be going up in the MVC portion, this is to provide a means of reducing wages rapidly ( aka giving the wage a flexibility *downward of course :<* )to help company remain competitive as it either restructure or revamp itself in a crisis... UNfortunately... your daily expenses such as food, transport, housing and other expense do not have a MVC component.... which is to say... if for some reason your wages drop because MVC dropped... your expenses may not be able to drop in tandem ( aka ... you are gonna be in the red)
As wages continue to rise... price... of goods and service will automatically rise in tandem (though not matching 100 percent) after a time lag... this time lag is critical... and suffers from a downward rigidity as well... ( though not as rigid as wages ) because the cost of production was in the past when the price is probably higher...
So.... as wages has been rising in the past... years... due to a tight labour market and higher salary expectations... raising prices to maintain company profitability is just a matter of time... and not a matter of IF..
The govt needs to step in... fast and hard to prevent this uncontrolled duo tandem rise in wages and price... but there is a danger.. too fast and too harsh a control... could cause irrepairable damage to the economy... the MVC is a good start... frankly a nice idea.... but it does have limitations....
One of the biggest problem with MVC is its fluidity ( which is supposed to be its strength) the high fluidity of MVC makes it highly unpopular to workers as the worker becomes *exposed* to unforseen potential wage adjustment without warning... EVERY month!!
this could cause severe unhappiness and dissatisfactions if the workers recieve wages that is lower then his expected income.
such discrepancies which if left uncontrolled will result in lowered moral , productivity and efficiencies ( companies might end up with dozens of MCs)
it also could result in higher resignation rate (aka worker turnover) which will hit productivity and product/ service quality... and it is possible that such disruptions taken together could end up increasing the overall cost of production rather then lowering it as the MVC is originally intended. ( trust me... i seen it in my company)
In fact... companies who adopt a MVC sysem as a significant component of total wages... can kiss employing good workers for long term basis... goodbye.... unless the boss makes their MVCs *not so flexible*
another problem with MVCs is that it could be exploited by employers to force a worker to leave... by purposely withholding the MVCs ...
This is because... while the govt came up with the MVC idea... the Idea is not complete... as it does not have rules or regulations or formulae to ensure that the MVC is pegged honestly and equitably to company performance...
