‘Stuck in the slow lane’

The average worker has lost nearly ÂŁ12,000 in real earnings since the financial crisis a decade ago, new research has shown.

A report from the TUC found that in some parts of the country, wages are worth a third less than in 2008, with certain areas in the UK hit harder than others such as Redbridge in London, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in north Wales.

Real wage losses over the last decade ranged from ÂŁ20,000 a year in London to about ÂŁ5,000 in the North East. In the South West, average real wage losses were ÂŁ14,400.

The North West has also seen a significant loss of real wages over the last decade – pay packets in some areas are worth over £150 a week less than in 2008.

According to the TUC’s calculations, wages will not recover to pre-crisis levels until 2024. The analysis claims that the UK is the only country with an advanced economy besides Italy whose real wages are still below pre-crises levels.

TUC general secretary Frances O’Grady condemned the government for failing to tackle Britain’s cost-of-living crisis.

“As a result, millions of families will be worse off this Christmas than a decade ago,” she said. “While pay packets have recovered in most leading economies, wage growth in the UK is stuck in the slow lane.

“Ministers need to wake up and get wages rising faster,” O’Grady added. “This means cranking up the pressure on businesses to pay staff more, especially at a time when many companies are sitting on large profits.”

Unite inquiry

‘Cranking up the pressure’ is precisely what Unite is now doing as it launches a formal inquiry into the cost of living. Through this inquiry the union aims to challenge the government’s official inflation index, the Consumer Price Index (CPI), which consistently underestimates increases in the cost of goods and services.

Unite argues that RPI is the most suitable inflation index for collective bargaining simply because it is more accurate – it includes the cost of people’s homes and so takes into account mortgage payments, rents and tax, unlike the government’s CPI, which doesn’t include housing costs at all.

The CPI further fails to reflect the lived experiences of working people because this measure used to calculate expenditure includes groups such as the super-rich, tourists, pensioners and students living in halls of residence. RPI, on the other hand, includes none of these groups irrelevant to workers’ bargaining position.

Unite’s cost of living inquiry aims also to challenge profitable employers who refuse to give their workers adequate pay rises, as well as counter the government’s ‘living wage’ ceiling, which – as any worker on the minimum wage knows – is far below what’s needed to live a decent life.

Unite Executive Officer Sharon Graham, who is leading the inquiry, said that the union is launching the inquiry “to challenge the failure to tackle falling living standards and address the aspirations of working people”.

“Ordinary people need to find their own voice through unions,” she noted. “The views of experts can be important but so are the demands of workers. We need to raise confidence and aim for a good life not just an acceptable one. Make no mistake the money is often there to pay. We now need to go out and make sure we have a plan to get it.”

Unite general secretary Len McCluskey hailed the cost of living inquiry, calling it “important work being done by our union to challenge inequality and to ensure workers get their fair share of the wealth that they help to create”.

Commenting on today’s TUC’s report on UK workers’ loss of real earnings over the last decade, McCluskey highlighted the fact that union members see a pay premium.

“We call it the union dividend,” he tweeted. “It’s not just me who says that – the @bankofengland recently confirmed TU membership is associated with higher pay for workers of between 10 and 15%.”