Studies of Economic Change

High Wages

Employers and their associations warn constantly that the increase of the wages causes job losses because they are forced to initiate measures to rationalise the company processes which jeopardises the wealth of the society. But on the other hand it is irrational simply to abstain from improving the efficiency. The obvious cuts in jobs even by high profitable companies confirm the fear of an increasing unemployment rate by wage increases. But the process of rationalising is not immoral if the social and economic rules are considered. The question if the rules are adequate to achieve social welfare is subject to this work.

It is obviously true that high wages accelerate the necessity to optimise the company processes. This requires problem solving capacities. Consequently companies need a professional human resource management for how they can recruit motivated and highly skilled employees. The request to support the educational system enforces the allocation of public and private budget funds. It is the purpose to to form the people to accountable and responsible enlightened citizens which is the fundament to support science and technology as well as to optimise the company processes.

This leads according to the idea of the evolution theory to increasing productivity rates while on the other hand the economic growth Slows down because of the "law" of diminishing marginal utility. The consequences are cuts in jobs and the increase of the unemployment rate, furthermore the necessity to increase the taxes and duties. The social cohesion is in danger. The disintegration and collapse of the society is likely.

But efficiency by rationalising the processes cannot be avoided as this is necessary to enable the international competitiveness. As mentioned in the previous chapters the labour force participation has to be increased by reducing the hours worked. Therefore the unemployment rate decreases and by that the payroll related costs as well. In connection with an increase of the efficiency the performance of the companies increases.

The additional export surplus which can be achieved due to an improved competitiveness enables another increase of the wages.

Furthermore the low domestic demand is expected to increase substantially as a side effect.

This leads to a positive feedback:

High wages enable high wages.

The consequence is maximum welfare in a leisure-oriented society.