Question 14.13: Technicians’ Earnings Study The monthly earnings of technici......
Technicians’ Earnings Study
The monthly earnings of technicians over a five-year period (2006–2010) and the CPI for the corresponding periods, with 2006 as base period, are shown in Table 14.20.
(See Excel file C14.9 – technicians earnings.)
Management Questions
1 Find the technicians’ real monthly earnings relative to 2006.
2 Calculate the price relatives of technicians’ earnings using 2006 as the base.
3 Have technicians’ annual salary adjustments kept ahead of annual inflation?
Table 14.20 Real monthly earnings and price relatives (2006–2010)
| Year | Monthly earnings (R) | Consumer price index (base 2006 = 100) | Real earnings at 2006 prices (R) | Price (earnings) relative |
| 2006 | R12 400 | 100 | R12 400 | 100.0 |
| 2007 | R13 100 | 109 | R12 018 | 96.9 |
| 2008 | R15 200 | 120 | R12 667 | 102.2 |
| 2009 | R15 700 | 130 | R12 077 | 97.4 |
| 2010 | R17 600 | 135 | R13 037 | 105.1 |
Table 14.20 shows technicians’ real earnings over this five-year period, and the price relatives of the real monthly earnings (i.e. earnings at constant prices).
Note: The ‘Real earnings’ column reflects the purchasing power of monthly income in 2006 terms.
Management Interpretation
Monetary income showed an increase for each of the five years. However, real income (purchasing power) declined in 2007 (relative to 2006) by 3.1% and again in 2009 (relative to 2006) by 2.6%. On the other hand, salary increases in 2008 resulted in real income being 2.2% above the base level of 2006, and increases in 2010 pushed real income 5.1% ahead of the base year incomes of 2006.