To wonder where all the money is going to come from to increase wages?

[girlfriend44]

Genuine question. Re people who are striking for more money.

Where do they think the extra money is going to come from to increase all their wages and how will this keep inflation down?
Can the government really afford to pay everyone more?

Not this again. Same place it came from for all the PPE backhanders, etc, etc. etc.
Paying people a proper wage will bring in more income tax, NI, VAT, fuel duty etc - it's not a simple equation.
The government could do it if they wanted to - their refusal is due to ideology not on the basis of practical economics.

100% agree. The Government can always find money for their pet projects so why not to properly reward their staff. Public servants have been underpaid for far too long (I am not nor have I ever been one by the way!)

If the government stop haemorrhaging money on wasteful things then a lot of money could be redirected.

what do you mean not this again, ive never asked it before.

Where does it end and are the government really a bottomless pit of money all the time.

OP

you got your answer with the first reply. You can't still have questions!

Great question. Where could this money possibly come from? People are so naïve wanting a pay rise.

They should just cancel Netflix and not get take away coffees.

Well it seems to be a bottomless pit when it comes to contracts for their friends. Or ignoring massive taxes owed. Or getting the Nation to pay for their gas bill etc etc

Tax and cuts to services.

The money will either come from increased taxes and national insurance or cuts to services.

The super rich are increasing in numbers, it's time to close the tax loopholes, increase tax on the super rich. Increase VAT on very high end luxuries and somehow make a tax on hedge funds.
Hedge funds own everything from student debts to old peoples homes.

This. There is enough money. The country is not short of money. It’s just very unfairly distributed and frequently wasted.

I do understand why people reference the massive historic wastage by this government because it’s hugely frustrating but it doesn’t really answer the OP’s question. That money’s already gone.

The real problem is that teachers and nurses have been underpaid for years, since long before the economic crisis. But it’s come to a head during this crisis for obvious reasons. And the government thinks that giving the entire public sector (because that’s what this will ultimately amount to) a pay rise at this point in time will fuel inflation and make life even worse for the rest of the population. Which is probably right, although it might not be, because the current causes of inflation are almost entirely external.

But this is why public servants should have been paid properly in the first place.

They'll find it for their own salaries, for subsidised food & energy & non dom status. They just don't want to find it for teachers & nurses etc.

never said that but where does the money come from?
Are the gvt a bottomless pit of money all the time?

They seem to manage to find it for mps often enough

You haven't but lots of other people who know nothing about economics and think government spending is like household spending have. It's a dullard question.

Well the money for the nurses payrise could come out of the money they are currently paying agency nurses (about double) - once that money is redirected to the regular nurses they'll attract more stafff and not need agency. Further, earning more will mean they need less tax credits so the government will save money there and finally if they earn more they will pay more tax, more NI and spend more in the shops and pay more VAT.

They used QE, which put the country into record debt. Not sure I'd want them to go in that direction again to fund pay increases that will deepen and extend inflation.

OP, you’ve been given your answers none of which include the government being a bottomless pit. Do you nor believe what pp’s are telling?

Of course they don’t want to find it for teachers and nurses, largely female jobs!

It should only apply to those public sector jobs in a genuine recruitment crisis where you can’t work from home - because nobody wants to do those jobs anymore due to the terrible combo of pay relative to demand. I am sure we can up the wages for this sector only.

exactly the gvt can only pay out, what they get coming in?

I think it's all a ticking timebomb. Everyone wanting higher wages, no-one wanting to pay higher taxes, an NHS on it's knees and needing increased spending, an ageing population, a 70% increase in people claiming disability benefits which can amount to a substantial amount for years on end. No idea how it will all be paid for.

Because more in wages ultimately = more tax.

The jump in the NMW in April will increase Tax revenue, as more people will find themselves over the thresholds, and start paying it, and those already paying it will pay more. The same raise will cut the benefits bill by meaning more people earn more of their income rather than claiming it.

Beyond that, VAT, PAYE, NI Contributions, (and pensions contributions but they don't help balance the books now, just eventually) Corp tax etc etc are all percentage taxes.

This means that more in wages means more in contributions from businesses. In turn, they put up prices, increasing VAT and (possibly) Corporation Tax takes.

People with more money in their pockets spend it in shops and restaurants and service businesses, putting money into the economy to keep it buoyant. Of course, that's also more tax running through the government coffers and keeping the country liquid. They buy property - stamp duty and eventual inheritance tax. They invest - capital gains tax.

There's also the issue that, in some cases, they really have no choice. You can't hike the NMW by 9.7% this year, on top of around 7% last year, on top of, on top of etc and not eventually expect the middle bracket to kick off and demand they're paid their value of their skills.

From April, the NMW balances out for a full time worker to around £20k a year before tax. That's any adult, doing any job for 37.5 hours a week.

Want people to spend years at college and then Uni training, at their own expense, and then do stressful, demanding, absolutely essential jobs? Pay them.

Want them to take on roles where they're responsible for the safety of others, sometimes putting their own lives on the line, and certainly seeing things which shock and upset them? Pay them.

Want them to work utterly unfriendly, exhausting patterns with no work/life balance? Pay them.

Because if we don't - then people won't. We need people to want to do these jobs, and we need a lot of them, so we have to make it worthwhile. The universally understood way of making something 'worth it' is the reward at the end. For a job, that's your paycheck.

It's obviously very far from as simple as this, of course, but it's also really not as simple as 'where's it coming from?'

It isn't great for inflation, though, you're right about that.

@ginnybag 👏 so very well articulated

There has been no explanation as to why the money could not come from the same source as it did when Truss and Kwarteng decided to crash the economy to enrich their mates...