September 25, 2022

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Why can we reduce our monthly salaries |  Currently

Why can we reduce our monthly salaries | Currently

With the amount we earn each month, we can do less and less. How much is our salary actually worth today? And why is our country getting richer than ever, when so many people now have to make ends meet?

According to the Statistics Office CBS Disposable income per capita has more than doubled in the past 50 years. However, many people currently feel that they have to work harder for less.

This is primarily due to the increased workload, says FNV President Tor Elzinga. “Work productivity has also increased. Profits have risen to record levels, and shareholder compensation has gone up. But the incomes of many workers have been flat for years. We call this skewed growth. There is a lot of money, but it is distributed more and more unevenly.”

In addition, due to hyperinflation, we can also buy a little bit of our income. In July, prices of consumer goods and services increased by 10.3 percent compared to the same month last year.

According to Hugo Erkin, economist at Rabobank’s RaboResearch, the rate of inflation on low incomes is even higher. “For this group, inflation is likely to be around 15 percent or even higher. This is because energy and food costs for low-income people make up a relatively large portion of their total expenditures. It is in these categories that we see the largest price increases.” with the inflation calculator You can calculate your personal inflation number from the Central Bureau of Statistics.

Living has become much more expensive

Affordable housing is scarce. Because of rising housing prices and rents, workers are getting less and less housing for their wages. Additionally, renters often have poorly insulated homes, which in turn leads to higher energy bills. “Like Woonbond, we believe rents should be reduced as soon as possible and not just in 2024, as the government is proposing. It’s an immediate incentive to become more sustainable quickly. Because if that doesn’t happen, the income will disappear immediately,” Elzinga says.

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This leads us directly to the sharp rise in gas prices, which makes the cost of living even higher. This is why the government has already provided compensation for the exorbitant gas bill. Low income people can get one payment Additional energy cost Additional 1,300 euros. Erkin: “This compensation helps, but we don’t expect energy prices to go down in the near future, so energy is expected to remain expensive.”

Are higher wages the answer?

FNV wants people to be able to keep buying the same thing out of their wages anyway. “In addition, we want to see some improvement in purchasing power, at a fixed amount of €100. This is proportionately more for lower incomes,” says Elzinga. Erkin: “You’re really compensating employees for inflation, but those higher wages in turn lead to higher wage costs for employers, who then raise their prices. That makes you more expensive compared to foreign competitors.”

“Enough companies are licking the wounds of the corona crisis or have tight margins because product prices have risen sharply.”

Hugo Erkin, Economist at RaboResearch

The step toward reform, Erkin says, is to raise the minimum wage. FNV also wants employers to pay employees at least €14 per hour. Erkin says raising wages is not without consequences. “Not all employers can pay their employees more. Enough companies are still licking the wounds of the coronavirus crisis or have tight margins because product prices have risen sharply.”

A much-heard solution: Taxing people with wealth more so that business taxes can actually be reduced even less. Elzinga: “A lot of people make money with money and pay less taxes than people who earn their money by working hard. We want a higher corporate earnings tax and a bigger tax on wealth. Income from wealth should be taxed at at least the same level as income from work.”