Workers in Britain face the longest squeeze on their pay since reliable statistics started, according to the government’s own Office for Budget Responsibility. The OBR projects that by 2021 mean average earnings — pay adjusted for inflation — will not have recovered to their 2008 level.
Average real earnings fell by 9% between 2008 and 2013. The IFS believe the situation is getting worse because of Brexit. The Financial Times reports the same picture, “Before the Brexit vote [the Office for Budget Responsibility (OBR)] had been expecting slow earnings growth over the next few years, with average wages finally returning to their 2008 level by 2020. [Brexit] will hurt productivity and wage growth, while the drop in sterling that followed the vote will push up inflation… real wage growth will stall next year and even by 2021 average earnings will be below their 2008 level.”
Working-class living standards, from both wages and benefits, are certain to decrease without action being taken by the labour movement. Inequality will also grow. Cuts in means-tested benefits are likely to mean a widening disparity between the income growth levels of the richest and poorest households, particularly working-age households.
The income of those aged 60 and over was 11 per cent higher in 2014 than in 2007. In contrast, the income of households aged 22-30 in 2014 was 7 per cent below its 2007 level. The average income of households aged 31-59 was the same in 2014 as in 2007. The TUC’s response has been completely inadequate: “Today’s OBR forecast shows that the average annual wage will be £1,000 lower in 2020 than predicted at the Budget. And this is on top of wages still having not recovered to their 2007 levels.”
Also stating the obvious but offering no prospect of a fight to change anything, Unison General Secretary Dave Prentis said; “Aside from those on the very lowest wages, the pay misery for school, hospital and town hall staff goes on. The government’s stubborn refusal to end the [public sector] one per cent pay cap means wages are lagging way behind rising food and fuel prices, causing real financial hardship.
“And with the Brexit storm clouds gathering, the grim economic outlook can only spell more despair for public services.”
We are all too aware that wages are low and prices are rising, but we have seen a series of failed attempts by all the major unions to push back against this reality since the crisis of 2007. ]
A series of one-day strikes with no strategy to win followed by a failure to push and coordinate any action on pay has allowed the government and bosses to continue to drive down real wages. Only a resurgent fight in the trade unions and in the Labour Party will reverse this.