Pay falls for sixth consecutive year

26 November 2014

British workers are facing a sixth year of falling pay, figures from the Office of National Statistics (ONS) have shown. This year wages have risen by 0.1% – the smallest increase since records began 17 years ago. When inflation is taken into account, pay is down 1.6% on 2013.

George Osbourne has exploited the latest ONS statistics to claim that the gender pay gap has fallen, however in reality this is due to a sharp drop in men’s pay, rather than any levelling out. The pay gap has still only dropped by 0.6%, now standing at 9.4% – one of the highest among advanced economies.

Inflation has exceeded wage growth every year since 2008 – in real terms, pay is back to the same levels as in the early 2000s.

Britain’s low-paid, insecure employment culture, where only one in forty new jobs is full-time, where under-employment has doubled to 1.3 million, and where bogus self-employment has rocketed, casts serious doubt on the quality and strength of economic growth.

Responding to the ONS data released on Tuesday (25 November) showing that under-employment is still far above pre-recession levels, Frances O’Grady said “Under-employment is still much higher than it was before the recession, which is a clear sign that the UK isn’t creating enough of the right kind of jobs.”

“There is a big shortfall in the supply of full-time employee jobs, and that’s making it harder for families to earn enough for a decent standard of living”.

Last week Ed Miliband pledged to tackle Britain’s “zero-zero economy”. “People [are] asking why they are on zero-hours contracts while those at the top get away with zero tax”, he said. “This zero-zero economy is a symptom of a deeply unequal, deeply unfair, deeply unjust country; a country I am determined to change.”

Miliband used Sports Direct, infamous for their use of zero-hours contracts, as an example, “Sports Direct has thousands of its employers on zero-hours contracts, the vast majority of its workforce. Sports Direct has predictable turnover, it is a modern company with stores on many high streets and, judging by its success, where many people shop.

“But for too many of its employees, Sports Direct is a bad place to work. This is not about exceptional use of zero-hours contracts for short-term or seasonal work which some employers and workers may find convenient. This is the way Sports Direct employs the vast majority of its workforce. These Victorian practices have no place in the 21st century. And under a Labour government, the exploitation of zero-hours contracts will be banned.”

While Miliband’s anti-inequality rhetoric is welcomed, there was a marked absence of any proposals on how to address it. Commenting on the statements, Keith Ewing and John Hendy, note that “The solution lies only in raising wages and equalising incomes, and the only way by which that will be done is by revitalising collective bargaining between trade unions and employers.  Inequality levels have grown primarily because collective bargaining coverage has collapsed. While well-intentioned, living wage campaigns are a feeble alternative calculated to fail. Until Labour is prepared to take steps to empower trade unions and restore the universal coverage of collective bargaining, there will no meaningful solution to the problem of low pay and zero hours contracts.”

A call for a “workplace pledge” has been launched in parliament (18 November). It proposes that “every worker, on day one at work, would receive a pledge that sets out their rights and how to exercise them. Key to this would be a fair rate of pay, transparency of pay rates, an end to zero-hours contracts, a safe and secure workplace, an end to employment tribunal fees and a voice at work with the right of access to an independent trade union to advise and represent.”

Read more about the workplace pledge here.

To find out more about collective bargaining, the IER publication Reconstruction After the Crisis: A Manifesto for Collective Bargaining is available for purchase.