Friday, December 12, 2008

Is a salary cut the solution to the current economic crisis?

Around the world workers are already complaining about poor salaries, which is making it difficult for them to have both ends meet on daily basis. Asking them to accept salary cut is just asking them to accept an increase in their financial hardship.

Many people have been hit by the increase in the prices of basic commodities, making their budgets overstretched. Those affected have to make do without -among other things- leisure activities to satisfy their demands for basic needs.

A salary cut means a halt to personal plans like getting a house or having a relaxing holiday. Should people spend their time looking for cheap goods , watching TV and chatting over empty beer glasses to reduce the effect of salary cuts? For people in the West, it will be difficult to ask them to help aid organisations like Oxfam to help the poor when they themselves need help. An impoverished person in the West means more impoverished people in the already poor countries.

A cut in salary can be accepted. It is far better than redundancy and receiving unemployment benefits (which is not the case in the majority of countries around the world). At the individual level, this can be a good compromise. But for the national economy, this can have devastating effects as other industries will suffer, especially leisure activities like tourism. Less money for tourism means a slowdown in the sectors related to it like aviation, hotels and so forth.

If a cut in salary is a necessary price for a promising economic recovery for all, let it be. It can be an opportunity for people to consider the era of ME is over and it must be the WE era. Ordinary workers can accept a salary cut if the bosses also accept to have drastic cuts in their income and to experience the financial limits until full economic recovery.

If salary cuts are general, how can the economy keep going? Less income means less spending. Tightening one’s belt can be acceptable if only it is temporary. Salary cuts and massive sacking of workers are an introduction to economic collapse. What is needed is a policy for economic stimulus to keep the production and consumption chain going.

3 comments:

Bunc said...

Salary cuts all round simply risk us entering a deflationary spiral which would be catastrophic.

Anyway - Festive greetings to you and your family Abdelilah and wishing you all the best for the New Year coming.

abdelilah said...

Thanks Bill for your good wishes.
Merry Christmas to you and your family. And similarly all the best for the New Year coming.

putri-bali said...

it's nice pictures here. i like to see more, sometimes may i put on my blog....?
well thanks