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The London Business School with Gower Publishing
Publication year - 1978
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1978.tb00176.x
Subject(s) - earnings , economics , inflation (cosmology) , exchange rate , private sector , publishing , wage , government (linguistics) , labour economics , monetary economics , finance , economic growth , political science , linguistics , philosophy , physics , theoretical physics , law
Stage 3 is being widely heralded as a success. In fact compared with the government's initial aspirations, the guidelines particularly in the private sector have been exceeded by 50 per cent. Far from marking continued restraint. Stage 3 allowed massive ‐ and unsustainable ‐ increases in real take home pay thanks to favourable factors on inflation and generous tax cuts. The outcome has proved very close to forecasts we made before any guidelines were prepared and it suggests that incomes policy has played little part in holding down earnings in the private sector. Looking ahead to Stage 4, we discuss the ability of firms to pay high wage increases given the development of the exchange rate and world prices. If the exchange rate is held (which is possible if current monetary policy continues) the increase in earnings in 1978/79 should be restricted to about 11–12 per cent.