Falling prices are also threatening the budgetary situation, both through adversely affecting the tax take if they result in higher real wages (thereby choking-off the recovery of employment), and generating an unintended increase in the real value of payments which are fixed in monetary amounts.
Wage discussions need to recognise the increased purchasing power of money in an environment where inflation is falling; if not then our wage structures will move out of line with competitors. Retaining wage competitiveness to sustain and increase employment is a key priority, even if it means cuts in nominal wages.