Makes me glad I live in a country where pay raise to match inflation (at a minimum) each year is mandatory by law.
Allows us to ask for actual pay raises on top of that.
Allows us to ask for actual pay raises on top of that.
For nearly any Good / Service the price is not 100% labor.
This means that if a price index (PI) goes up 2% and that causes a 2% increase in labor prices those labor prices will have a <2% increase in that PI. Lets be generous and say it has a 1% increase in that PI. That 1% increase will cause a 0.5% increase in the next PI iteration and next time it's a .25% and will effectively become 0% as the number of iterations increases.
The fact that prices aren't 100% labor is also why when looking at minimum wage increases the cost of a good doesn't increase by the same amount that minimum wage does. i.e. increasing minimum wage 20% (historically) doesn't increase a PI by 20%.
So it's illegal to give someone a pay cut?
I guess they lay them off instead, but probably that is a legal issue too?
Luckily going out of business is perfectly ok (I assume), as well as never starting a business in the first place.
https://www.ecb.europa.eu/pub/pdf/other/mb200805_focus05.en....