Wednesday, 19 May 2021

lnflation doubles in a month and jobs impact this may have

 Continuing on from yesterday's excellent comments. Today we have seen inflation reportedly rise from 0.7% to 1.5% inside a month. None of this is unexpected, big drops from a year ago when commodity market crashed are coming out of the figures now as prices rose again quite quickly into April/May 2020 after the Feb/March dip. 

Also, as touched on yesterday, we are seeing wage rises come back into play. The missing million of working age population who left post-Brexit and Coronaplague can't come back yet. So now businesses are looking forward, there is a big "war for talent" as the HR-types like to say when they are feeling pseudo-intellectual.

At the same time, there are plenty of people not very keen on going back to the office, especially senior quite well paid people who are likely more productive without commuting thrown into their days. What do companies do in the short and medium term? These people are paid London level salaries but could now live in Wales in theory. That surely won't last. Commuters who had to pay for season tickets just had a £4000 bonus last year. Equally, for more junior staff, they need the senior people to learn their skills from which does not happen so much over Zoom. 

My take on this is a hybrid model will out, where actually yes you might live further from London and only come in 2-3 days a weeks, but senior jobs will not really be allowed to be full remote in the longer term and if they are, they will be deemed specialist and not senior - thereby changing the pay over time for that role. So this will allow things to continue in a not dissimilar way to now. 

At the moment, companies have too much to deal with sorting out return to office, planning new office spaces, working in a newly busy market, trying to hire poeple etc, to really absorb any of the long-term lessons - which is why we see such divergence with HSBC saying most can work from home and Goldman's saying none. 

Of course, this is a very South-East centric post, in the rest of the Country people generally did not live 80+ miles from work and so this is less of an issue, plus there are of course most actual jobs, which did not cater for the WFH world anyway.

One thing that leaves me cold is that somehow, this will all lead to all jobs going to India etc. adn that flexibility is a path to hell. "People can work from anyway so why not hire them where they are cheapest" and so careful what you wish for. If this were true it would already have happened (indeed it did, hence China), the new element is only that companies have realised they can survive more flexibility now, not that they need a whole new cheap team. The conundrum remains how do you fairly reward/price flexibility as an offer to your staff given it has big upsides for them over the company - but to go back to my earlier theme, in a war for talent, flexibility may just end up a priced in benefit for now.

16 comments:

Jan said...

Shaun Richards has written about inflation today in his blog:

https://notayesmanseconomics.wordpress.com/

The true rate is a lot higher than we are lead to believe because CPI does not reflect housing costs

Nick Drew said...

Putting my financial engineering hat on**, flexibility = optionality, and there's no such thing as a free option

well, of course, that needs qualifying immediately. Sometimes, free options are indeed available (or badly mis-priced options) because the sucker selling the option doesn't realise what it's worth. (Hoovering up underpriced options was a speciality at Enron: I may even have done some of that myself.) Ideally (because in the long run that's not healthy) you can happily exploit valuation differentials that are natural enough and not necessarily a sign of pure stupidity

having said all that, I haven't thought through its application to CU's matter-in-hand ...
__________
**One of my favourites: I made a lot of my dough wearing it

dearieme said...

We received a letter yesterday from a firm of estate agents. Lots of London refugees, they assured us, would love to buy a house such as ours. Would we care to get in touch to proceed matters?

My wife's reply was "over my dead body". Which she meant too.

Anonymous said...

Shades of 2008.

... a recent conversation revolved around the idea that we need not be taxed. We should keep all we earn. The government, to pay for the services they commission on our behalf, will simply "print" the money they need electronically.

After all, that's what they are all doing now.

Being a millionaire will lose some of its lustre when we're all millionaires

CityUnslicker said...

Jan - other measures of inflation are available that include house prices. there are interesting leave them out, not all entirely plausible.

Unknown said...

I think the main reason we pay taxes is to justify having a vote. In principle, Parliament can vote against any government spending.

Don Cox

Matt said...

@ Unknown

If only paying taxes was to justify having a vote (for the people not parliament). No representation without taxation would remove a whole raft of people voting to get more for themselves from others.

Anonymous said...

Isn't voting just a psychological trick to fool us into thinking we have some leverage over the forces that control us?

Unknown said...

Until relatively recently, it was indeed the case that only those who paid taxes (basically, men with property) ad a vote.

Don Cox

Elby the Beserk said...

dearieme said...
We received a letter yesterday from a firm of estate agents. Lots of London refugees, they assured us, would love to buy a house such as ours. Would we care to get in touch to proceed matters?

My wife's reply was "over my dead body". Which she meant too.

3:23 pm
==========================================================================
Down From Londons we call them here. Not particularly welcome. Contribute nothing, and often leave homes empty for months. Just had one buy a twee thatched cottage down the road. And another house in the village. And rented one for the gardener. And his Chelsea Truck Co. 4x4, shining bright and not a drop of Somerset mud on it. Garden is immaculate, but planted to need next to no maintenance. A complete item as it were.

We don't want them.

Mind. 3 or 4 years back, Lils and I and an old mate had a cider weekend in a village in Dorset with a famed Cider House in Worth Matravers. There's an estate on the edge of the original village which we were told is COMPLETELY un used during the winter. Nice village, but felt soulless. Cracking pub tho', no bar, you buy from a hatch, and the food is veg or meat pasty. Sorted :-)

https://www.facebook.com/squareandcompasspub/


Elby the Beserk said...

Unknown said...
Until relatively recently, it was indeed the case that only those who paid taxes (basically, men with property) ad a vote.

Don Cox

9:59 am
===============================

Um. Full suffrage we have had for 100 years. Voting, not much longer. Just saying!

Matt said...

100 years ago, living off the state teat wasn't a viable career path. Things change and having too many people vote for less austerity (in reality, just no increases) isn't sustainable.

dearieme said...

Before the Great Reform Act (1832) women Heads of Households had the vote in some constituencies.

In some constituencies all men (i.e. over 21) could vote. In others the voting qualification was low - it was enough to be a tenant in a property that had a fire you could heat a pot on.

People's idea of our history is pretty odd - it bears the hallmarks of decades of left wing indoctrination. The great thing was that there was little imposed uniformity.

The purpose of the Act was precisely to impose uniformity while also making a start at reforming nonsenses such as rotten boroughs and cities without MPs.

E-K said...

Inflation ?

Too much money chasing too few goods

or

Getting poorer (depending on how much your currency has been debased)

Our reaction to CV-19 is killing more people that the disease itself and even now (when there were only three deaths per day) they wouldn't tell us if those deaths were *with* or *of* CV-19.

They are satisfied to tell us that it was 'within 28 days of being tested positive for CV-19'

What is scientific about that ? They only had three people for the coroner to assess. And what standard is the nappy on your face made to ???

E-K said...

Inflation ?

Too much money chasing too few goods

or

Getting poorer (depending on how much your currency has been debased)

or

The Great Reckoning (some might say The Great Reset)

We have just become China's bitch.

E-K said...

In answer to the original post

LONDON was the magic. The history, the shows, the pubs, the shops...

Now it may as well be Frankfurt or anywhere...

Lockdown comes at a price. WFH comes at a price.

Last year my wife and I saw - on remote walks where we'd never usually see a soul - all those idiots out with their picnic baskets, straw hats and Catherine Kitson print dresses waving like prats as if to say "We're British ! This is how we do a pandemic !!!"

It was like when a couple in a 4x4 turns up at Lidl as if they're trailblazers on a safari.

Did they really think this was a holiday ?