Efficiency wage theory advocates that businesses can reap dividends from paying employees more than the market wage through high job performance and staff retention. Better pay equals better job satisfaction which in turn reduces industrial unrest and all of the recruitment, training, and supervision costs associated with high staff turnover. It is a win-win strategy, and a case of ‘you get out what you put in’. But the ideology is not to everybody’s taste. Some argue it is a fallacy. Take the three security firms that have brought a judicial review against the government’s plans to introduce statutory pay rises…

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