In a public pension, there is some sort of tax, which is taken from workers to pay the pensions. If you want to increase pensions, you need to increase those taxes, hence everything else being equal you lower the real wage of workers.
Ok, so what you’re saying, I think, is that if we increase the wages, i.e., if the companies pay the workers more, somehow, tax revenue goes down, which affects pensions. I lose the plot where I inserted “somehow”. I’m missing some kind of connection there that you seem to see but I don’t.
The production of the workers labour is basically split three ways: Wage, company profit and taxes. If the workers productivity does not change, an increasing the wage is therefore going to reduce profit and/or taxes.
I don’t understand this. Why?
Why give more to the workers, when you can take it yourself?
Yeah, so that argument makes sense when your pension is privately funded. I can’t really connect the dots for the public ones.
In a public pension, there is some sort of tax, which is taken from workers to pay the pensions. If you want to increase pensions, you need to increase those taxes, hence everything else being equal you lower the real wage of workers.
Ok, so what you’re saying, I think, is that if we increase the wages, i.e., if the companies pay the workers more, somehow, tax revenue goes down, which affects pensions. I lose the plot where I inserted “somehow”. I’m missing some kind of connection there that you seem to see but I don’t.
The production of the workers labour is basically split three ways: Wage, company profit and taxes. If the workers productivity does not change, an increasing the wage is therefore going to reduce profit and/or taxes.