Purchasing power

About: Purchasing power is a research topic. Over the lifetime, 2714 publications have been published within this topic receiving 36866 citations. The topic is also known as: adjusted for inflation.

Rising food and energy prices in Europe and Central Asia

Abstract: The purpose of this paper is to illustrate the channels through which rising commodity prices might affect countries in the Europe and Central Asia Region (ECA) in the short run and to indicate which countries are most likely to be significantly affected. This paper discusses the effects of the global food and energy price increases on ECA countries from two perspectives: (a) impacts on the macro-economy through inflation, the trade balance, fiscal accounts and growth; and (b) distributional impacts within countries. It aims to highlight vulnerabilities to rising commodity prices and discusses some policy interventions to mitigate the impact of rising prices. It puts the ECA experience in the context of the last commodity price increase as well the recent global economic crisis. Section one summarizes the state of global commodity markets. Section two discusses the main macroeconomic channels through which commodity price increases affect the economy. Section three discusses the potential poverty impacts of the price increases and the ability of countries' social assistance systems to deal with the heightened need for social assistance. It also discusses country responses to the crisis to date with reference to policies followed during the 2008 price hikes. Section four examines ECA's agriculture sector and potential responses to the commodity price increase and price volatility. Section five discusses the energy sector. Bank support to ECA countries to help deal with commodity market a development is discussed in annexes one.

Transforming Supply Chain Industrial Relations

Abstract: Pressure on multinational corporations (MNCs) to account for violations of workers' rights in their global supply chains is increasing. Campaigns by Global Union federations, NGOs and online campaign networks are making the connections between labour rights abuses at the far reaches of a company's supply chain and the global headquarters that controls the chain and collects the profits. Workers and their unions are becoming increasingly sophisticated in identifying the MNCs at the top of the supply chain when violations take place, and are pressuring them to act.Workers at all stages of global supply chains can justifiably ask why their pay and working conditions are so poor when they are making products or contributing services for corporations that rake in massive profits and could well afford to guarantee all workers in their supply chains a decent standard of living. In the last quarter of 2014, Apple reported the biggest quarterly profit ever by a corporation: US$18 billion. It is sitting on cash reserves of US$142 billion. Meanwhile the workers who make the products responsible for generating these unprecedented profits receive only US$4 for making an iPhone 6 that retails in the United States for US$649. MNC buyers at the top of global supply chains do not necessarily employ directly the workers in the factories that produce their goods, but their purchasing decisions have a powerful influence over wages and working hours.The UN Guiding Principles make clear that a company is responsible for conditions in its supply chain, regardless of where the work is performed and what the employment relationship is between it and the workers. This positive development has made it impossible for multinational companies to evade accountability for abusive conditions through their extensive use of outsourcing, subcontracting, agency work and other means of avoiding direct employment relationships. But what if the entire sourcing model is precisely predicated on low wages, long hours and exploitative working conditions? How can a company fulfil its responsibilities within a system that entrenches abuses of worker rights?The global garment industryIn garment industry supply chains, exploitative working conditions are standard. Workers are forced to work long hours, often far beyond legal boundaries, for poverty wages and in conditions that breach even the lowest of occupational safety and health standards. Many live in absolute poverty whilst others teeter just above it. Continual downward price pressure by companies keeps workers' wages low while their purchasing power declines against inflationary increases on basic necessities such as food and energy.The wage of most garment workers is no higher than the level of the minimum wage in their respective country, which in many cases is well below the level of subsistence. In countries where the minimum wage is set at industry level, wages for textile and garment workers are lower than for other industries. Global average wages in the textile and clothing industries are respectively 24 per cent and 35 per cent lower than the manufacturing industry average wage.Excessive working hours are a continuing and entrenched problem. Production peaks are managed by relying on excessive overtime. Workers are compelled to work extremely long hours in order to supplement their basic earnings towards a level where they can support themselves and their families. Even when they work excessive additional hours, many workers are unable to achieve this goal.Precarious employment conditions are rife, with temporary contracts, agency work and subcontracting the norm. Violations of the right to freedom of association are commonplace, unionization rates are extremely low and collective bargaining is rare.Decades of public campaigning and recurrent fires and building collapses occasioning multiple deaths have given a high level of visibility to labour conditions in garment supply chains. …

The minimum wage: does it really help workers?

Abstract: There is perhaps no greater cognitive dissonance thari that which exists between the view that economists and non economists have about the minitniini wage law. According to the latter; most recently articulated by President Clinton in an attempt to raise the level of coverage from $5.15 to $6.15, this law is all that stun& betweri pQorer working Americans and a continued loss in the purchasing power of their salaries. However; as the present paper points out, this is a stlare arid a delusion. The minimum wage actually creates unemployment for the unskilled. Far from benefitting them, it is a positive hann to those at the bottom of the labor market.

Agricultural Income Determinants among Smallholder Farmers: Case of Northern Part of Burundi

Abstract: About 90 percent of Burundi population depends on agriculture for their livelihoods. Agriculture employs the majority of labor force and is the basis source of income particularly for people living in rural areas. Agricultural income determines the purchasing power of many people living in rural areas. It is therefore important to examine the -determinants of agricultural income for proper policy formulation that will help to improve welfare of farmers. The main objective of this study is to analyze the determinants of agricultural income among smallholder farmers in Northern part of Burundi. Based on field survey which covered 218 respondents and using linear regression, we found that among 8 variables used in the analysis, only the family size and the farm size have shown significant effects on agricultural income at 1% and 10% levels respectively. Some suggestions were also mentioned to sustain the agricultural returns, the well-being of farm households and to improve the rural infrastructure.

Food Prices, Government Subsidies and Fiscal Balances in South Mediterranean Countries

Abstract: Soaring food and energy prices sparked the revolts in Northern African countries at the end of 2010. Despite government subsidies, consumer price inflation rose, which reduced consumers’ purchasing power. This article empirically investigates the impact of world food prices on inflation and government subsidies for Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the occupied Palestinian territories and Tunisia during the ten-year period 2002-2011. Our findings show an asymmetry in the response of consumer price inflation to world food price shocks, in that soaring world food prices made inflation rise fast while nominal rigidities prevented inflation from falling. Moreover, this paper shows that government balances deteriorated up to 2% of GDP in 2008 and 2011 due to the incremental government food subsidies while they hardly improved in value terms when world food prices sharply fell in 2009.