Orris Johnson can’t stop banging about wages.
Sunday saw a test exchange with the BBC’s Andrew Marr over the prime minister’s claim that pay packets were increasing for the first time in 10 years. This week he argued that the labor shortage is part of a “transition” to higher wages in the post-Brexit economy. And now Boris is ready to disclose the hike in the minimum wage.
As always with Boris, some of the claims are controversial. Covid and Brexit have skewed the numbers on wage increases. Inflation is eating away at rising earnings, which means many won’t see growth in real terms. Economists say that Boris’s “transition” argument would not be necessary in most A-level economics classes. As Next boss Lord Wolfson put it bluntly in the Standard this week: “If the problem is that there aren’t enough employees available, cash alone may not attract more people.”
We may question the numbers but what will ultimately animate both voters and businesses is simple: Do they feel better? It was this killer question by Ronald Reagan in the 1980 US election that helped him get to the White House. This can have the opposite effect on Boris.
Natural gas prices continue to rise to unheard-of heights, which means bountiful energy bills could make wage increases miserable. Trade barriers with the EU are likely to mean rising import costs. Homemade options tend to be more expensive or simply non-existent. Good luck buying oranges from Kent.
Bank of America analysts wrote this week, “Governments can take offsetting action, but there are not many policy levers that raise real wages enough to offset the cost of Brexit, certainly in the short to medium term.” In.”
All this means that rising wages may prove to be nothing more than an illusion. As the saying goes: there are lies, damn lies and statistics.