by Tim Lezard It will take 12 years for wages to reach pre-recession levels, says the TUC. Commenting on the labour market statistics published yesterday by the Office for National Statistics, which show wages (+1.3%) rose higher than inflation (+1.2%) …
It will take 12 years for wages to reach pre-recession levels, says the TUC.
Commenting on the labour market statistics published yesterday by the Office for National Statistics, which show wages (+1.3%) rose higher than inflation (+1.2%) for the first time in five years, Frances O’Grady said: “It’s good to see an increase in real wages after so many years of falling living standards, but at today’s rate of wage growth it would take another twelve years for people’s pay to be worth what it was before the recession. And with the recovery looking as if it is already running out of steam, we cannot even be confident of that.
“Huge concerns remain about the quality of many of the jobs being created, and as the Chancellor has found out to his cost many people are not earning enough to pay much tax, if any.”
* UNISON says the government’s preferred method of calculating inflation (CPI) significantly underestimates the actual rising cost of living faced by workers.
The research by former Treasury economic adviser Dr Mark Courtney found the CPI is deeply flawed in terms of the statistical method used in its calculation and misses out major expenses facing most households, such as owner-occupiers’ mortgage payments. The difference between the two main measures of inflation, CPI and the Retail Prices Index (RPI), has been growing to the point that RPI is now almost double CPI.
The way that inflation is calculated can have an enormous impact on employees. The prominence given to CPI has encouraged some employers to use it as a reference point for pay negotiating, helping to push pay rises for staff ever lower.
UNISON general secretary Dave Prentis said: “This may seem like an irrelevant squabble about statistics but it has huge consequences for the value of pay packets and pensions.
“The public sector pay cap is set to continue until 2016 while Treasury compiled forecasts show that RPI is predicted to rise even faster at more than 3% from next year through to 2018, leaving workers and pensioners hundreds of pounds worse off every year.
“UNISON is calling on the UK Statistics Authority to recognise RPI as the most accurate measure of inflation in the UK.”
Earlier this year the Office for National Statistics reported that real wages have been dropping consistently since 2010 and the TUC found that it was the longest period of falls in over a century. More than five million workers are currently paid below the Living Wage, which increased last week to £7.85 and £9.15 in London.
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