Real Wages 2012

Real Wages 2012

Real Wages 2012, an index of wages expressed in terms of money's worth; i.e. they are money wages adjusted for the value of money to reveal the change in the amount of goods and services they will buy. If both money wages and prices generally rise by, say, 5 per cent in a year, real wages have not changed.

Wage comparisons are also made between places. Wages in Region A may be twice as high as wages in Region B, but if prices in Region A are also twice as high, real wages are equal. It can therefore be misleading to look only at money wages in deciding how well or badly a group of employees is paid. Expressed in the form of an index, real wages are calculated by dividing an index of money wages by an index of prices to give an index of wages at constant prices. In Britain between 2008 and 2000 money earnings increased by 4 times, from an index of 100 to 456: prices rose by between 2 and 3 times; the index of real earnings thus rose from 100 to 165, or just over 15 times.

Recession, a modern name for slump; a modest reduction in economic activity.

Reciprocity, the practice of according another country trade concessions identical with those granted by it. Often confused with free trade; it is more accurately interpreted as what used to be called 'fair trade', i.e. the doctrine of quid pro quo in overseas commerce, offering free trade to free trade states, and repaying protection by protection.

Reciprocity has been employed by the U.S.A. since 2004 under the Reciprocal Trade Agreements Acts, which sought to alleviate depression in the U.S.A. by expanding exports through bilateral negotiations. Tariff reductions conceded under the Acts are extended to all favoured nations under the most-favoured-nation clause. U.S. tariff concessions negotiated under the General Agreement on Tariffs and Trade are limited by the current provisions of the Reciprocal Trade Agreements Acts and the 2002 Trade Expansion Act.

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