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It mostly covers my work as UNISON Scotland's Head of Policy and Public Affairs although views are my own. For full coverage of UNISON Scotland's policy and campaigns please visit our web site. You can also follow me on Twitter. I hope you find this blog interesting and I would welcome your comments.

Monday, 13 April 2015

Why this election matters for wages

This election matters because Scotland and the UK needs a government that understands the importance of wages to individuals and the economy.

Since Cameron became Prime Minister the average wage is worth £1600 less or nearly £2,000 if you are a public sector worker suffering under UK and Scottish Government pay policies. This is the worst fall in living standards since Queen Victoria was on the throne. This has happened because the economy has seen a big shift from wages to profits. If the wage bill had just kept up with inflation there would be £5bn more spending power in the Scottish economy.

52% of working age adults in poverty are living in households where at least one adult is in employment, as were 59% of children in poverty. The very 'strivers' the Tories claim to represent. Even among those suffering, the pain is not evenly spread. Women in low pay have a pay gap of 34.2% and young workers classed as low paid has more than tripled over the past four decades.

In contrast, the wealth of the richest 1,000 people in Britain doubled to £519 billion since 2009. FTSE 100 Directors had a 21% pay rise last year and now earn 123 times the average Scottish full time worker. In 2000 that ratio was 40 times. Oxfam calculated that the combined wealth of the richest 1 per cent will overtake that of the other 99 per cent of people next year. A staggering statistic on global inequality.

Much of this inequality has been driven by tax dodging. Contrast how the rich and big corporations are allowed to dodge tax, to how the same state treats the unemployed. There were 1,046,398 sanctions, or financial penalties, imposed on Jobseeker’s Allowance claimants in 2013. Five years after HMRC got the HSBC data there has been one prosecution. The penalties for tax evasion remain lenient while the sick and disabled are humiliated by work capability assessments and Jobcentre staff are put under pressure to meet sanction targets.

Falling petrol prices may deliver a cut in the headline inflation rate, but it only masks the real pressures on family finances. Since 2007 the average rent for a Council House has increased by 26% and in the same time period the wages of a Council Worker has increased by 8.3%.

Families have been plugging the gap by using savings or getting into debt. 30% of families say they have less than £500 put away, compared with just 14% in 2013. The scariest chart from the OBR report on the Chancellor's Autumn Statement shows just how much Osborne is relying on household debt to dig us out of the economic mess he has created. The last time this happened we ended up with the longest and deepest recession ever.

Labour is committed as its 'central task' to build an economy that, "creates the better paid and more secure jobs we need to raise living standards". They understand that economic growth is the best way to pay down the deficit. This doesn't mean a sudden big increase wages, but it does signal an important change in direction. Practical measures like an increase in the minimum wage to £8 an hour, a ban on exploitative zero-hours contracts, promoting the living wage and a new lower 10p starting rate of tax. A national goal to halve the number of people in low pay by 2025 would lift two million workers out of low pay. Labour's plan for work also recognises the role of trade unions in the workplace and in tackling excessive executive pay.

The Tories believe that growth is trickled down from the top and have promoted a system where you compete by cutting wages and conditions for everyone else. A race to the bottom that's a key factor in the UK's poor productivity, lower tax receipts and increases in welfare spending. Of course Labour's plans on wages should be more radical and we should press for more. Scottish Labour has established a Commission to report later this year on how we can 'abolish low pay' in Scotland.

The choice in this election is between more of the same trickle down economics from the Tories, or a new direction on wages from Labour. So, this election really does matter for wages - please remember that on May 7.

 

 

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