Which of the following best explains why current employers do not seem to reduce wages for existing employees in the short term when the supply for a particular set of skills far outstrips the demand?
A) because of the wage compression phenomenon
B) because of the negative impact on performance and increased turnover
C) because labour budgets tend to be determined on an annual basis
D) because fewer potential employees tend to put upwards pressure on wages

Question

Quizplus · Accepted Answer

Reducing wages for existing employees can have a negative impact on performance and increase turnover, as employees may feel undervalued and seek work elsewhere. This can ultimately lead to higher costs for the employer in terms of recruiting and training new employees, as well as potential damage to the company's reputation.

Which of the Following Best Explains Why Current Employers Do