The economy

Press, 13 August 1980, Page 16

The economy

Sir, — I read daily on the commercial pages . of companies making apparently good profits, but in many cases the return on the net assets of these companies is well below the general. rate of inflation. What this really means is that businesses are shrinking and so logically the level of - unemployment is increasing. The business world is shrinking because the margin between businesses, sales, prices, and costs har. been eroded. There are essentially only three elments of business costs: these are imports, labour and profit. If there is no real profit then the total

costs of a business are labour and imports. To increase employment levels we need business growth. Business growth requires ; investment. Investment, requires profitable opportunities. Therefore, excessive wage demands in times of world recession and high oil prices are the road to massive unemployment and so social disaster. — Yours, etc., . ' S. WHITE. . . . August 8, 1980.