Post
Topic
Board Economics
Merits 1 from 1 user
Re: Is increase in minimum wage a good method to fight inflation?
by
G_Besar
on 19/02/2024, 15:37:38 UTC
⭐ Merited by Mame89 (1)
That's correct. In the long run, employers will lose their purchasing power due to inflation. If their salary is not adjusted to match the inflation rate, they will remain stagnant without any improvement unless they find an additional source of income, which may not be a viable option for many employees. However, during this scenario, they will have no other choice.

In inflationary conditions or scenarios, we are really forced to look for additional sources of income if employees do not receive a salary increase adjusted to inflation conditions by their bosses. Because people who still want to work with their usual salary will certainly not be able to survive if inflation conditions continue for a long period of time, so their choice will continue to be looking for other sources of income, even though they feel very forced and difficult.

And if entrepreneurs lose their purchasing power due to inflation, it will also have an effect on the condition of companies that provide goods or products that previously were often purchased by entrepreneurs. So that difficult conditions will also be felt by the company and can result in a reduction in employees along with a reduction in their production capacity due to such conditions. Finally, employees who have lost their jobs have to think about getting another job in order to continue earning income in difficult conditions.