Why Britain needs a pay rise

Britain needs a pay rise and I set out why in an article in today’s Scotsman newspaper.

British workers have experienced the longest real wage pay squeeze since 1870. Inflation has risen faster than wages for almost 43 months. The share of the economy going on wages continues to decline. In the 1960s and 1970s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. It is no coincidence that, for the first time, we have more in-work poverty than out-of-work poverty.

But while it is the rich who get the pleasure, there is more and more evidence that we are less and less willing to give the poor the blame. Opinion polls show strong support for a rise in the minimum wage, even among Tory voters. 

It’s also important for the local economy. Low paid workers in particular spend more of their earnings in local businesses. If Osborne was really interested in cutting the deficit, he might recognise that it’s the taxpayer that is subsidising bad employers through the welfare system.

I wrote the Scotsman article before Xmas. Since then there has been a flurry of new research supporting these arguments and in particular, highlighting the risk of creating another short lived debt fuelled economic ‘recovery’. I have summarised this in a post on our Public Works blog.

As I say in today’s article, it all comes down to the kind of country we want to live in. There is a better way and we need shout a lot louder about it in 2014.