1. Stability: Wage indexation helps to maintain stability in the economy by automatically adjusting wages in line with changes in the cost of living. This can help to prevent inflationary pressures and reduce the risk of wage-price spirals.
2. Fairness: Wage indexation can help to ensure that workers are able to keep up with increases in the cost of living, preserving their purchasing power and standard of living. This can help to reduce inequality and poverty.
3. Predictability: Wage indexation provides a level of predictability for both workers and employers, as they know that wages will increase in line with certain economic indicators. This can help to reduce uncertainty and improve planning.
4. Economic growth: By ensuring that workers have sufficient purchasing power, wage indexation can help to stimulate consumer spending and support economic growth. This can create a more stable and prosperous economy in the long term.
5. Social cohesion: Wage indexation can help to promote social cohesion by ensuring that workers are not left behind in times of economic growth. It can also help to prevent social unrest and promote a more harmonious society.
Why does government implement wage indexation as its policy
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