Better off?

Reading the headlines, you’d never know that most of the country has taken a repeated economic battering for years on end, as they suffer both soaring food and housing costs and stagnating wages.

Politicians crow about the economic recovery finally being under way, and they trumpet the plunge in unemployment numbers.  But who is this economic recovery really benefitting?

A recent Mirror article points to the scandal of twisted numbers the Tories are getting away with, as a new report finds the average employee at Britain’s biggest 350 firms are only slightly better off than they were a year ago.

How much better off? A grand total of 8p a month.

To put this number in perspective, British workers, who toil away for the nation’s richest firms which raked in almost £400bn in gross profits last year, aren’t even able to buy an ice cream with their extra handful of pence.

Unite assistant general secretary Steve Turner denounced the wealth inequality scandal that has seen such different outcomes between employees and top bosses.

“While the bosses of big corporations continue to line their pockets with extortionate pay rises (21% for ‘top directors’), bonuses, share options and pension pots, in the real world, workers are suffering,” he said.

According to a new report from pay expert Vocalink and the Centre for Business and Economics Research, the average worker employed by FTSE 350 companies earned roughly £1,534 last month – a 1.4 per cent increase from the same month last year.

But when taking into account inflation and soaring housing costs, real take home pay is up per month by the change you’d find in the cracks of your couch.

The report pointed to sectors in which workers are decidedly worse off as well.

Service sector workers saw their real pay drop by £1.43 per month since September 2013. Public sector workers were hit the hardest, seeing a real-term 0.7 per cent drop in wages.  This translates into being robbed of over £11 per month in the last year.

David Yates, chief executive of Vocalink confirmed that their findings showed without doubt that, despite the supposed economic recovery, “overall take-home pay growth is slow, so there haven’t been any notable gains.”

Slow wage growth is compounded by rising living costs and job growth that’s mostly been in low-pay sectors.

Retail, care and hospitality jobs have expanded tremendously, while the country lost over 300,000 manufacturing jobs since the beginning of the recession, where pay is much better. Over one and a half million workers currently in part-time work yearn to be full-time workers, but have no other choice.

These low-paid workers then must face costs that even middle-income earners can’t cope with – housing costs have trebled in the past 15 years, food costs have skyrocketed by 44 per cent since 2005 and electricity, gas and water bills have risen by 88 per cent in the last five years.

The extent to which Britain has become the land of low pay can be seen in income tax revenues, which represents a quarter of all tax revenues. While Chancellor George Osborne had expected £11bn more to come from income taxes this year, economists predict the Treasury won’t see even a quarter of this amount.

This is largely due to businesses redolent with profits choosing to keep wages as low as they can get away with legally.

Turner argued radical action is required to combat wage stagnation.

“Wealth inequality in Britain is obscene and can only be addressed by a fair system of taxation and the promotion of strong trade unions, the regulation for sector level collective bargaining to end the race to the bottom on pay and conditions, and the introduction of measures to bring effective and transparent industrial democracy to the boardroom,” he said.