Conclusion

Abstract

Fringe benefits in the guise of supplementary labour costs are an addition to wage costs which an employer incurs in providing labour. This simple fact is itself of significance, but it is more important since supplementary labour costs may be subject to a different pattern of fluctuation over time than wages. The effect of such an increase on labour costs could be more significant, and as well as this absolute increase there would also be a relative rise in the cost of more inflexible supplementary labour costs, including perhaps holiday pay and National Insurance contributions within a certain range. The important point about the effect of fringe benefits on the distribution of labour is whether aggregate labour productivity is increased, or whether labour productivity for the economy as a whole will be unchanged with labour costs at a higher level than before, even though individual firms may find their labour productivity improved.