Wages, inflation and distributive conflict: reflections on the sliding scale

ABSTRACT

This article tries to show some of the potential problems that appear with the adoption of the automatic mechanism of wage increase known as “trigger point indexation”. Theories about distributive conflict are the basis to describe the way the inflationary dynamic behaves in a system of wage periodical indexation, which is compared with the “trigger point “ system. The main conclusion is that if the government don’t manage to control prices strictly, the menace of an acceleration of inflation is considerable. ln this context, the article also discusses some of the different sceneries for the Brazilian economy that may be foreseen for the next future as a consequence of the conflicts observed now.

KEYWORDS:
Wage; wage policy; inflation