Fair Pay Day

Fair pay for Scottish council workers is fair for them and fair for the local economy as well.

Today is the first Fair Pay Day in the run up to a strike ballot by Scottish local government workers. The employers have offered a 1% increase and a Living Wage of £7.50 an hour (to be applied after the 1% rise). This follows a two year pay freeze during which council workers didn’t even get the government’s £250 underpinning for the low paid.

During the last three years, most local government workers have seen the value of their pay fall by nearly 13%, while living costs soared. Inflation saw prices rise by 11.2% (RPI). The UK currently has the highest food and energy inflation in Western Europe.

The UK Coalition Government’s austerity programme has led to council workers paying for a crisis that they didn’t cause. Pay freezes, job losses, increased workloads, cuts in working tax credits and in-work benefits, huge rises in food and fuel costs. Meanwhile, the wealth of the richest 1000 people went up by £116 billion. They could pay off the UK deficit three times over.

While it is true that Scottish local government is under financial pressure due to the cuts, many in local government recognise that expecting council workers to bear the burden of the financial consequences is not sustainable. Some councils budgeted for more than 1%. Most have been building up their reserves as the total unallocated reserves increased by 23% last year. We calculate that councils have saved around £860 million from job losses during the pay freeze and more than 34,500 jobs have been lost since 2008.

We are also storing up long term problems. Our members’ personal debts are growing with 22% reporting debts of £10,000 or more and 27% increasing credit card borrowing. As a consequence, 71% are cutting spending on family activities, 45% on physical exercise and 31% on health treatments.

So it’s affordable and fair for council workers but what about the local economy?

 
Council workers are the lowest paid group of public service staff. We know that low paid workers will spend much of their fair pay and Living Wage in their own communities – building the local economy. A study by APSE on the Economic Footprint of Local Services estimates that local government employees re-spend 52.5p of every pound in their pay locally. A similar study in Stoke put the figure at 63p.

Today the TUC has published an analysis of pay in the UK as part of their 'Britain needs a pay rise' campaign. They show £52bn being lost from local economies including £5.5bn in Scotland. In fact pay in Scotland has fallen 9.7% compared with 7.5% for Britain as a whole.

A lot more work has been done on this in the US including a recent report on the cost of Walmart stores paying basement wages to the local economy. A study by Demos provides further insight. It found that if wages rose to the equivalent of $25,000 per year for full-time work, more than 700,000 Americans would be lifted out of poverty, GDP would grow between $11.8 and $15.2 billion over the next year, and employers would create 100,000 to 132,000 additional jobs.

The falling share of GDP going into wages and the concomitant rise in profits means we have an increasing pool of capital for destabilising speculation, while the workforce becomes increasingly reliant on debt. This is a primary cause of the longest and deepest recession in our history.

Scottish council workers have actually paid for their own pay rise several times over. Not only do they deserve a fair increase, but it’s good for the rest of us as well.