Stem we get: The threshold system of cost-of-living increases, as we point out above, by no means gives such a comprehensive protection of wages against inflation as would a sliding scale. The following calculations, based on an extension of thresholds after Novem ber 1974 shows the value of the sliding scale system.
In October 1973 the Retail Price Index stood at 185.4. For the purpose of thresh old trigger points this was taken as 100. Of course the first 7 per cent rise in the RPI was not paid for, and the threshold payment of 40p was one per cent of a wage of £40 - well below average industrial earnings A year later the new RPI stood at 113.2. If we take this as a base point for calculating the increase in the cost of living in a similar way to the threshold 'trigger' sysRetail Price Index 1974 113.2 1974 115.2 1974 116.9 1975 119.9 1975 121.9 1975 124.3 1975 129.1 1975 134.5 1975 137.1 To give complete protection against inflation to a wage of £40 a threshold of 60p (not 40p) would be needed for each trigger point. For the period since October 1974 this would mean a threshold payment of 21 times 60p = £12.60 just to keep pace with with the cost of living up to the end of June. On £50 a week, which is nearer to the average wage, a total threshold payment of 21 times 75p = £15.75 would have been Without this type of sliding scale arrangement, most workers have at best beer % average increase Trigger Points over October 1974 Monthly Cumulative 1.8% 3.3% 5.9% 7.7% 9.8% 14.0% 18.8% 21.1%