Workers on low and middle incomes are experiencing the
biggest decline in their living standards since reliable records began in the 19th
century. For the average worker, wages have fallen by £1,300 every year
since the Coalition government took office in 2010.
But whether employed by public sector organisations or
private companies, wage increases for ordinary workers have actually been on a
declining path since the early years of this century. For those employed
directly by the public sector, this general pattern is made worse by the government’s
five-year pay freeze and cap, which union leaders have done nothing to oppose.
As a result, recent figures suggest that
those working in the public sector are an average of £2,073 a year worse off
than in 2010.
These stark findings on falling pay come from the New
Economics Foundation, in a report
commissioned by public sector union Unison. It finds that falling pay has resulted in and
compounds the worsening conditions of the low-paid:
- At least one in five workers in the UK economy earns low pay – too little to live on at £7.47 per hour or less, equivalent to £13,600 or less for someone working full-time.
- More than half of individuals, including children, living in poverty in the UK live in households where at least one adult is working.
- Low pay is a major problem in parts of public service. An estimated one million public service workers are on low pay, including health and social care workers, school staff and local authority employees.
- Growing numbers of public service employees are formally part of the private sector though paid for through taxes as outsourcing gathers pace. Evidence suggests that the shift from public to private can result in diminished pay and rights for workers with private sector discounting apparent for some occupations.
- Low pay is being compounded in the public services by the blight of zero hours in areas like social care.
As the report also shows, the proportion of low-paid workers
(defined as those on 60% of the median income for the economy as a whole) rose
from around 12% of the workforce in the mid-1970s to 20% by the mid-1990s,
where it has stayed. Moreover, the
proportion of households which are poor despite having at least one working
adult has been rising for a decade or more so that now in-work poverty
outstrips poverty associated with worklessness.
What their figures show, but both the NEF and Unison ignore,
is that low and falling wages are and have been essential to sustaining the
economy throughout the credit-fuelled period of globalisation. And this applies
whether we’re talking about the UK
on its own, or as part of the world economy. The evidence from the UK is there to
see in the report:
“Gross Domestic Product is the
headline measure of benefits from economic activity. The two major components
within this are compensation to employees (wages) and operating surplus
(profits). Over the past 30 years the share of benefits received by workers in
the form of wages has been falling. The wage share averaged 59% of Gross
Domestic Product in the 1950s and 1960s and then peaked in the mid-1970s at
65.5%. From then it followed a gradually declining trend, reaching 53% by 2007.
A temporary increase occurred in 2009 as the financial crisis hit business
activity and profits but the share has since declined again to its 2007 level.”
So all One Nation Labour’s talk of a cost-of-living crisis
disguises what has really taken place. There has been, and continues to be, a
transfer of wealth from workers to employers in the shape of lower wages and
higher profits. This has gone for decades, under successive governments and is
the price workers are paying so that corporate-driven globalisation can sustain
itself.
When the ConDems talk about austerity lasting into the
distant future, this is what they mean. They are waging a one-sided class war
while union leaders sit on their hand hoping that the election of a Labour
government will improve their members’ prospects. Fat chance!
Gerry Gold
Economics editor
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