I can’t believe the news today. The danish bus drivers are on strike again. They want higher salaries, but then who does not?
It’s all thanks to the labour unions. They’ve made a big deal of whipping their members into a frenzy this year, talking about how Denmark can “afford it”.
To me, that’s a completely ridiculous notion. The Danish workforce has gotten so used to this twisted thinking that their salaries should always increase faster than the inflation.
Why is that twisted, you might ask. Well, every time employers are forced to increase salaries without getting more value from their workers (harder work, more hours etc.), it cuts into their profit margin, and that usually leads to higher prices. Which leads to inflation, which makes the the increase in salaries pointless. The net effect on the workers purchasing power is neglible.
In addition to accelerating inflation, the continuous demand for higher salaries, and the resulting price hikes causes Danish products to be even more expensive in comparison with products from, say, Taiwan. Which causes Danish consumers to buy foreign products instead. And export becomes harder aswell, since the expensive Danish products are less attractive.
The net effect of this (oversimplified) calculation is a negative skew of the import-export balance, more inflation and a neglible difference for the Danish working man. The only winners here are the labour unions which can attract more paying members due to their perceived effectiveness in bettering the conditions of the workforce.
I don’t know if they are complete cynics or they actually believe they are doing good. What I do know is that the union bosses live very plushly north of Copenhagen. Perhaps they’ve come so far from the conditions of the workers they are to represent that they’ve completely lost sight of their objective.
The original objective of the unions was that no one should be forced to live in poverty. Everyone should get paid enough to support their families.
The changes they fight for might increase salaries today, but they add to the problems of the Danish economy — which is, sadly, on fast track to be the slowest grown economy in Europe…
Every time ...
the productiveness of the worker increases, he has to fight the employer to get his fair share of the cake. You seem to believe he should just hand it over to him on a silver plate.
Nis
No, I don't. But I think it
No, I don’t. But I think it is ridiculous to assume that all workers increase their productivity every year. Some people are just plain lazy and others get older and slower…
Your comparison of Danish
Your comparison of Danish products vs. Taiwanese products is only valid if the two products are equal. And while that may be true for pure manufacturing, areas such as design and R&D also plays a significant part in what you can charge for the end product. Why was Danish furniture famous in the 1950's and 1960's? Not because of cheap Danish labor, but because Danish manufacturers were able to provide unique products and thus charge a higher price.
Besides, higher wages leads to more revenue for the state that can be spent on improving infrastructure and education which will make the country more competitive. Unless you're a libertarian and live in some fantasy world, where there is no state and everything is governed by the invisible hand of the market...
That idea is however about as dead as classic communism - unless you think a guy like Anders Fogh Rasmussen has seen a light that more serious economists dismissed years ago. Given your attitude towards labor unions you probably are a libertarian, since they see socialism as the ultimate evil, because it is centered about a strong state and more taxes.
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