The Economist ~ Why are wages rising?
Day 3,913, 11:40
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Published in Iran 
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by
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by Spite313
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Dear friends,
Today I just want to briefly cover the wage rises we’ve experienced throughout 2018. Wages have risen from 300 to almost 600cc since I re-joined the game in late March, and they seem set to rise further. So what is causing this rise?
In the real world wage growth is a complex phenomenon that isn’t easily explained, but most economists would put wage growth down to increases in overall productivity. This makes sense: essentially as workers produce more goods, their work becomes more valuable. Increases in productivity (and therefore wages) also have the secondary effect of creating wage-push inflation, as other costs rise with wages. This means wages in secondary occupations that don’t directly produce (i.e. the service industry) also grows at a competitive rate.
Essentially the nature of work in eRepublik is that it produces a product (the work ticket) which can then be used to create other products. The value of a work ticket tends to hold true across all countries (there isn’t much price disparity). This is because when a company owner sets a wage, it is offered in every country he/she owns a holding company in. So if I set a wage of 590 currency to be competitive in Romania, it is also offered in the other countries I have holdings in. This means that wages tend to be fairly consistent in all markets.
So to summarise: all workers produce the exact same thing, for approximately the same price. We can therefore categorise labour as a simple product like any other, and the more simplistic law of supply and demand applies. In other words, wages will rise when there is a shortage of labour.
But why does this keep on occurring? Why do wages continue to rise? This is because of what we discussed earlier: wage-push inflation. As wages rise, so do costs. This is then passed directly on to consumers in the form of higher prices. Since all workers are also consumers, this becomes circular.
There are two major industries in eRepublik that use workers: Housing and Weapons. The admins have confirmed that the GDP calculations are based on manufactured products only. So let’s quickly look at GDP changes over the last 10 days:
We can see a little bit of shrinkage in food/weapons (this is basically because the last article was done right at the beginning of an event). However you can see that since last time the housing sector has grown by almost a fifth. What’s more, you can see that the value of the housing sector is now worth a huge 17.5 million per day (in the 10 largest economies) whereas weapons are now only worth 10.8 million per day. Whereas a fair proportion of the value of weapons is the WRM cost (about a third) which is produced by work as manager (WAM), the whole production cost of houses is worker wages. This means that, at a guess, around 70% of work tickets are used in the housing industry.
I’m not going to go into GDP now (it’s a topic for a future article) but what we can clearly see is that the housing sector is what is driving up wages by instigating demand. In turn, this means that prices are also slowly rising across the board as increase in worker costs also makes weapons more expensive to make.
This is cyclical: the demand for workers is going to remain higher than the supply, unless there is a significant baby boom. I think there are a few contributory factors to the growth in the housing industry, however the biggest one is that the housing industry is too accessible. The low price of entry means that many more people can afford housing companies than weapons, and there is a lot more demand in the market. Q5 housing companies are relatively inexpensive compared to Q7 weapons, but they use a lot more workers.
Houses are also extremely beneficial, and most people can realistically afford a Q1 and Q2 house. However, a single Q1 house costs around 5 workers to make. A Q2 house costs 10. That means over an 8 day period a worker with both needs the productivity of 15 workers whilst themselves only producing (even with extra work tickets) 24 tickets. The entire weapon industry then has to fit into the gap left by housing. Hence the squeeze.
So will prices and wages continue to spiral? It seems likely for now. There are some benefits to this for ordinary players. Firstly, gold prices are remaining stable. This means for workers their wages are worth more in gold terms, which means they can buy training ground upgrades and other gold products more easily. Secondly, whilst prices are rising, they aren’t rising as fast as wages. So in real terms, people are earning more (which means less profits for big business owners of course).
I promised to keep it brief, so I’ll end it there. There are several possible solutions to this issue that I can think of. Please do post your own in the comments, if anything inspires me I will explore it in more detail in a future article: if not, I’ll give you my own ideas at some point. It’s a big issue, so I want to think about it a bit more before I write further. See you for now ~
Iain
Dear friends,
Today I just want to briefly cover the wage rises we’ve experienced throughout 2018. Wages have risen from 300 to almost 600cc since I re-joined the game in late March, and they seem set to rise further. So what is causing this rise?
In the real world wage growth is a complex phenomenon that isn’t easily explained, but most economists would put wage growth down to increases in overall productivity. This makes sense: essentially as workers produce more goods, their work becomes more valuable. Increases in productivity (and therefore wages) also have the secondary effect of creating wage-push inflation, as other costs rise with wages. This means wages in secondary occupations that don’t directly produce (i.e. the service industry) also grows at a competitive rate.
Essentially the nature of work in eRepublik is that it produces a product (the work ticket) which can then be used to create other products. The value of a work ticket tends to hold true across all countries (there isn’t much price disparity). This is because when a company owner sets a wage, it is offered in every country he/she owns a holding company in. So if I set a wage of 590 currency to be competitive in Romania, it is also offered in the other countries I have holdings in. This means that wages tend to be fairly consistent in all markets.
So to summarise: all workers produce the exact same thing, for approximately the same price. We can therefore categorise labour as a simple product like any other, and the more simplistic law of supply and demand applies. In other words, wages will rise when there is a shortage of labour.
But why does this keep on occurring? Why do wages continue to rise? This is because of what we discussed earlier: wage-push inflation. As wages rise, so do costs. This is then passed directly on to consumers in the form of higher prices. Since all workers are also consumers, this becomes circular.
There are two major industries in eRepublik that use workers: Housing and Weapons. The admins have confirmed that the GDP calculations are based on manufactured products only. So let’s quickly look at GDP changes over the last 10 days:
We can see a little bit of shrinkage in food/weapons (this is basically because the last article was done right at the beginning of an event). However you can see that since last time the housing sector has grown by almost a fifth. What’s more, you can see that the value of the housing sector is now worth a huge 17.5 million per day (in the 10 largest economies) whereas weapons are now only worth 10.8 million per day. Whereas a fair proportion of the value of weapons is the WRM cost (about a third) which is produced by work as manager (WAM), the whole production cost of houses is worker wages. This means that, at a guess, around 70% of work tickets are used in the housing industry.
I’m not going to go into GDP now (it’s a topic for a future article) but what we can clearly see is that the housing sector is what is driving up wages by instigating demand. In turn, this means that prices are also slowly rising across the board as increase in worker costs also makes weapons more expensive to make.
This is cyclical: the demand for workers is going to remain higher than the supply, unless there is a significant baby boom. I think there are a few contributory factors to the growth in the housing industry, however the biggest one is that the housing industry is too accessible. The low price of entry means that many more people can afford housing companies than weapons, and there is a lot more demand in the market. Q5 housing companies are relatively inexpensive compared to Q7 weapons, but they use a lot more workers.
Houses are also extremely beneficial, and most people can realistically afford a Q1 and Q2 house. However, a single Q1 house costs around 5 workers to make. A Q2 house costs 10. That means over an 8 day period a worker with both needs the productivity of 15 workers whilst themselves only producing (even with extra work tickets) 24 tickets. The entire weapon industry then has to fit into the gap left by housing. Hence the squeeze.
So will prices and wages continue to spiral? It seems likely for now. There are some benefits to this for ordinary players. Firstly, gold prices are remaining stable. This means for workers their wages are worth more in gold terms, which means they can buy training ground upgrades and other gold products more easily. Secondly, whilst prices are rising, they aren’t rising as fast as wages. So in real terms, people are earning more (which means less profits for big business owners of course).
I promised to keep it brief, so I’ll end it there. There are several possible solutions to this issue that I can think of. Please do post your own in the comments, if anything inspires me I will explore it in more detail in a future article: if not, I’ll give you my own ideas at some point. It’s a big issue, so I want to think about it a bit more before I write further. See you for now ~
Iain
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Interesting!
Prices and wages are rising because of currency generated from TP medals. Top legend players deal over 1 billion damage just by emptying their health bars - that's over 10k cc. With more legends and increasing strength it will only get worse.
An increase in gold supply would have an impact on the exchange rate, but that hasn't happened. Also I'm not sure how adding more gold into the game would impact wages?
TP medals each give 1000cc not 5g.
I agree with this point of view, as the amount and the level of legend players are both increasing, the country economy is heavily depend on those cc awarded by TP medals. Therefore, the more legends and more training wars actually results in more cc being printed, and making cc less valuable.
poor work done in this article. all industries that use work tickets are basically unprofitable if you take in account the price of resource material.
production in these sectors is based on accumulation rather than real economic principles. in short it feeds the producers own needs.
go do your sums properly and you will come to the same conclusion.
As someone with many hundreds of companies, I am well aware of the productivity- I check every week what is actually worth working in. It is entirely possible to make a profit, even buying raw materials from the market and employing workers at market wages. I made a nice fat amount in the last event for example, selling my stockpile at the inflated prices it created 🙂
You just have to do the maths... and understand how to manage a business.
Yet I make a lot of money each month. Sometimes the simple maths don't work, because you're assuming too many variables remain constant. Yes a lot of people probably do break even or lose money because they lack imagination. I'm not one of them. And really, I don't need to justify myself - I make a lot of money and I don't buy gold to do it.
your denials help nothing. i usually work on 50 work tickets give you about 1000 weapons cost you 28500 needed 2000 WRM cost 14760 cc selling 1000 q7 weapons would net you 42000 minus 14780 minus 28500 = loss of 1280 cc. i worked on q5 housing you make a 1000 cc on its production but that cost you an excessive amount of work tickets etc etc. remember i said with the cost of resource materials figured in only wrm require wam tickets but in all cases employees can only now be employed by tanks wanting to produce weps for their own consumption, multies or communes. for the rest of us this is no longer an option. but for some reason some people ignore this.
Wages rise because game is dead for new players. without new players we have lack of work power more and more.
And old players stock more companies(when they have high income from many ways) and they just put work offers in markets for fun.(products by workers has no profit or really little profit)
By the way there are some guys use multi power indeed.
My solution for admins is just bring something interesting for new players, do not let your game be shit more(before be too late)
An increase in workforce is definitely a good start. However a Q1 house at least is an 'essential' product now, so you can assume the trend of people buying them would continue even with lots of new players.
well new players just use q1 houses so they give 2work ticket and get once(for their q1 house)
but old players use at least q1 and q2 houses, and many fighter accounts use q3 house too. soo they bring lack of workers in job's market.(4work per day they did when for their houses needs more than 6work ticket and maybe more)
By the way we are talking about houses industry. q7 wep producer use workers too.
Solution is to bring the mobile app, which should have happened a few years ago, everything now has a mobile app. How do you plan to be relevant and attract new players without app???
I got invited to the app beta but haven't heard anything since it was rolled out. An update would be good!
When was that?
I dont see a way to bring younger generation of players without an app, kids spend more time on phones than on pc, because they can do almost everything on phone...
https://forum.erepublik.com/index.php?/topic/5601-erepublik-mobile-app-closed-alpha/
there is a mobile app. I got it. It's beta or smth like that.
dope !
Just took a shower. Fresh and clean now.
I note that the amounts spent on salaries since the end of July 2016, so two years following the salaries.
Usually I pay the highest or near the highest salary in the world.
In July, the average was 199.68 CC
In August / 16: 195,53 CC
In December 2016 the salary rose to a level above 205, being relatively stable until May / 2017, when it surpassed 230 CC, and continued to rise until it surpassed 300 cc in December.
We can easily notice that there are many Multiple Fake accounts in every country.
We know that they will have impacts on the economy.
They get some easy 18-20 gold just by leveling up before getting banned and this fake gold which is based on a reward system (rather than being productive) is finally injected into the market.
This increases the demand while it is fake and has a bubble effect.
Actually, multiple account makers are having a great influence on company owners and making the business more beneficial than it should be.
What will happen if a few multiple account maker leave the game? The collapse of the prices?
Actually, MC makers are a great part of our market management factors which calculating their effect is hard and unpredictable.
I think admins need their robots back in market.
o7
Hi Ian!