wage resistance

wage resistance
Difficulty in cutting wages. Real wage resistance applies to cuts in real wages, and nominal wage resistance to cuts in money wages. Both trade unions and those bargaining individually with employers tend to regard wage rises lower than the increase in the cost of living as unacceptable, and nominal wage cuts as insulting. Indeed, most employers take the same view and are embarrassed even to suggest wage cuts unless their own economic survival seems to be at stake. Even unemployed ‘outsiders’, who want jobs, are reluctant to suggest accepting lower wages than the established rate in case this is regarded as signalling that they regard themselves as inferior; and employers, who do take this view, are unwilling to take on workers who offer to undercut the market rate. Real wage resistance makes it very difficult to cure ‘classical’ unemployment. See also [The entire page is 161 words long]

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