Wednesday, February 27, 2008

Fed up with falling pay :(

I was pleased to be invited to speak yesterday to the AGM of the Southwark branch of UNISON, in connection with which I was reading some briefing notes produced by UNISON HQ in support of the local government pay claim.

These made the sound point that price rises rather than our pay claims are what is driving inflation (although I did feel a reference to the price of haircuts made me needlessly self-conscious…)

Anyway, it got me looking at labour market statistics, which led me to think that prices certainly have gone up – the all items Retail Price Index having increased by 17.3% between 2002 and 2007. That means roughly that each pound we earned in 2007 could buy what eighty five pence would have bought five years before.

Earnings across the economy as a whole have kept ahead of prices (though not by much) – having increased by 20.6% over the same period, so on average workers are a little less than 3% better off in material terms over those five years. This is what an increase “in real terms” means – it means you can buy more than you could before.

However, taking a fixed point on the local government pay spine (say SCP 28), that has increased by just 15.5% between 1 April 2002 to 1 April 2007, from £19,776 to £22,845. So a local government worker stuck at the top of a grade for those five years is actually worse off in real terms (by 1.5%) than we were five years ago. That means that our salaries are only buying us 98.5% of the goods and services we could afford when we settled the 2002 pay dispute (that's a pay cut "in real terms").

So not only are we falling behind average earnings (by four and a half per cent over the five year period) which pushes us down the “pay league” we are actually worse off than we were. A 6% pay rise (bringing SCP 28 up to £24,216), with the RPI at 4%, in the coming year, would put our pay a grand total of half a per cent higher “in real terms” than it was in 2002.

Implementation of our full claim would just lead to us “catching up” with rising prices, it wouldn’t come near to “matching up” with increasing average earnings. I think we had better do something about this…

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