TUC general secretary Frances O’Grady speaking at Congress 2014 by Frances O’Grady Thousands of people from across England and Wales will today travel to London by coach, train and car to take part in the TUC’s Britain Needs A Pay Rise march and rally. …
by Frances O’Grady
Thousands of people from across England and Wales will today travel to London by coach, train and car to take part in the TUC’s Britain Needs A Pay Rise march and rally.
They, like me, want fair pay to be at the top of the political agenda as we head towards the election–and with good reason.
The government says that the economy is growing. But that is not true for most people’s pay packets.
As the Governor of the Bank of England told last month’s TUC Congress workers have suffered the deepest cut in wages since the 1920s. And you have to go right back to the 1870s to find a time when it took longer for wages to recover after a crash.
Workers in the UK are, on average, £2,500 a year worse off than they were in 2008 and that’s if use the government’s preferred inflation measure (consumer prices index) which excludes housing costs.
We have three big problems with pay.
Firstly, one in five workers in the UK earns less than the living wage – a number that rises to nearly one in two in some parliamentary constituencies, such as Kingswood near Bristol.
For women the situation is even bleaker. In West Lancashire and Mid-Derbyshire, for example, nearly three-quarters of women with part-time jobs earn less than the living wage.
Our second big problem is that even those with steady jobs have not had pay rises that keep up with inflation, especially when we look at the price of basics such as food, fuel and housing.
Back in 1997, just one in ten local authority areas were ‘out of reach’ – with average house prices more than five times local salaries. However, over the last 16 years, the number of ‘out of reach’ areas has increased eightfold, with 84 per cent now having house prices at more than five times the local salary.
Five is an important number here as the Bank of England has recently instructed banks to limit the proportion of mortgages they offer that are more than 4.5 times applicants’ salaries. If this trend continues future generations have little hope of ever getting on the property ladder.
Our third big problem is growing wage inequality. In 1998 top chief executives earned 45 times more than average workers’ pay – enough for anybody I’d say. However, they now earn 175 times the average salary.
This should worry everyone. Those with the biggest pay packets may dismiss this as the politics of envy, but income inequality is bad for the whole economy. It helped drive the financial crash as banks lent the savings of the wealthiest to those who borrowed to keep up their living standards when wages were not.
So how can we begin to fix these problems?
For a start, we need bolder increases to the minimum wage and an increased commitment to the living wage from employers in the public and private sector so that their own staff, as well as those in their supply chains, can have a decent standard of living.
Employers in many sectors can afford to pay more without job losses. That’s why we need to find new ways for employers and unions to work together to set higher wages, agreed at a sector level by modern wages councils, so that workers and businesses can both get a fair deal.
Secondly, we need greater collective bargaining to get wages rising back in line with prices. Even organisations like the International Monetary Fund (hardly a trade union mouthpiece) say that collective bargaining can increase wages for ordinary people.
And crucially, we need workers to sit on company boards and remuneration committees to tackle the issue of soar-away executive pay. A real recovery would ensure everyone got a fair share. That is why the TUC is organising the Britain Needs a Pay Rise march and rally in London on 18 October. We hope you will join us.
A real recovery would ensure everyone got a fair share. That is why the TUC is organising the Britain Needs a Pay Rise march and rally in London on 18 October. We hope you will join us.
Frances O’Grady is general secretary of the TUC
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