TUC General Secretary Frances O’Grady explains why North-East workers need a pay rise.
Next Tuesday, April 1 will mark the fifteenth anniversary of the minimum wage – a historic milestone in British labour history.
Before its introduction in 1999 some workers were being paid as little as £1 an hour. The minimum wage has helped to end such abuse. It has proved to be a vital safeguard for employees across the North-East.
The Low Pay Commission recommends the level of the minimum wage. Its first ever chair Sir George Bain said last month “with more than one in five workers in Britain suffering from low pay, it’s time to talk about how we strengthen the minimum wage for the years ahead.”
Sir George is right. The minimum wage has undoubtedly lifted many out of extreme low pay, but research shows that many employees start work on the minimum wage and then stay there – failing to lift their pay above the minimum even after years at work.
In the North-East over 75,000 workers are on the minimum wage. Many are likely to stay on this rate for a large part of their working lives.
Lifting the minimum wage above inflation as politicians of all parties now support will help these. But many employers could do more by adopting the higher voluntary minimum standard known as the living wage – set at £7.65 an hour.
But it is not just those on low pay who have been left behind. New TUC research shows that the gap between the top ten per cent of wage earners and average pay in the North-East has grown by 5.3 per cent since 2000.
This should worry everyone. Those with the biggest pay packets may dismiss this as the politics of envy, but income inequality is bad for the whole economy. It helped drive the financial crash as banks lent the savings of the wealthiest to those in the middle who took out credit to keep up their living standards.
For some the pay squeeze has been even sharper. To take just one example, academic staff at the universities of Durham, Teesside, Newcastle, Northumbria and Sunderland have seen real-terms pay cuts of 13 per cent over the last five years. And this is just one instance of jobs that were once secure and decently paid slowly being turned into insecure work that can no longer deliver the living standards once thought fair.
This real wage squeeze is a key aspect of a wider cost of living crisis. Energy bills have risen three times faster than inflation over the last decade, while rail fares rose above inflation yet again this January.
Childcare and housing costs have also grown as a share of average income.
People are now spending over a third of their disposable income on essentials such as food and fuel. People think of the cost of living crisis in terms of prices but the main cause of the problem is that their wages are not going far enough anymore.
So can we do something about it? Or is it just an inevitable fact of life that living standards are in decline and that for the first time in history future generations will have lower living standards than their parents?
Economic growth alone is not the answer. The economy has grown by £60bn in the last four years but real household disposable income has barely increased. Disposable incomes have fallen by nearly £500 per person.
A first step is bolder increases to the minimum wage. Had it kept pace with prices since 2007 full-time minimum wage workers would be nearly £800 a year better off. We need to make up this lost ground but also ensure that companies who illegally pay staff less than the minimum wage face the full force of the law – including being publicly named and shamed.
Secondly, we need an increased commitment to the living wage from employers in the public and private sector so that their own staff, as well as those in their supply chains, can have a decent standard of living.
Employers in many sectors can afford to pay more without job losses. That’s why we need to find new ways for employers and unions to work together to set higher wages, agreed at a sector level by modern wages councils, so that workers and businesses can both get a fair deal.
More collective bargaining can stop employers skimping on pay and get wages rising back in line with prices. Even the International Monetary Fund (hardly known for its radicalism) concedes that the decline of collective bargaining has increased wage inequality and reduced wages for ordinary people.
This month the TUC is organising Fair Pay Fortnight – a series events and street stalls throughout the North-East – to raise awareness about Britain’s cost of living crisis.
We need to put fair pay at the top of the political agenda and ensure that policymakers and employers create more high-quality jobs to boost productivity and raise people’s living standards. People need more money in their pockets if local economies are to thrive.
The North-East needs a pay rise.
Source – Northern Echo, 26 March 2014
This article was written by Larry Elliott, economics editor, for The Guardian on Monday 17th March
The scale of Britain’s growing inequality is revealed today by a report from a leading charity showing that the country’s five richest families now own more wealth than the poorest 20% of the population.
Oxfam urged the chancellor George Osborne to use Wednesday’s budget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.
The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top.
Although Labour is seeking to make living standards central to the political debate in the run-up to next year’s general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010. But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-value London property in order to pay for modest tax cuts for working families.
The early stages of the UK’s most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership.
In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.
The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital’s soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn).
Oxfam’s director of campaigns and policy, Ben Phillips, said: “Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet.
“It’s deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline.”
The UK study follows an Oxfam report earlier this year which found that the wealth of 85 global billionaires is equivalent to that of half the world’s population – or 3.5 billion people. The pope and Barack Obama have made tackling inequality a top priority for 2014, while the International Monetary Fund has warned that the growing divide between the haves and have-nots is leading to slower global growth.
Oxfam said the wealth gap in the UK was becoming more entrenched as a result of the ability of the better off to capture the lion’s share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% have seen a real terms increase of only £2.82 a week or £147 a year.
The charity said the trends in income had been made even more adverse by increases in the cost of living over the past decade. “Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase.”
Osborne will this week announce details of the government’s new cap on the welfare budget and has indicated that he wants up to £12bn a year cut from the benefits bill in order to limit the impact of future rounds of austerity on Whitehall departments.
Oxfam said that for the first time more working households were in poverty than non-working ones, and predicted that the number of children living below the poverty line could increase by 800,000 by 2020. It said cuts to social security and public services were meshing with falling real incomes and a rising cost of living to create a “deeply damaging situation” in which millions were struggling to get by.
The charity said that starting with this week’s budget, the government should balance its books by raising revenues from those that could afford it – “by clamping down on companies and individuals who avoid paying their fair share of tax and starting to explore greater taxation of extreme wealth”.
The IMF recently released research showing that the ever-greater concentration of wealth and income hindered growth and said redistribution would not just reduce inequality but would be economically beneficial.
“On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme”, the IMF said in a research paper. “And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political or broader social considerations.”
Phillips said: “Increasing inequality is a sign of economic failure rather than success. It’s far from inevitable – a result of political choices that can be reversed. It’s time for our leaders to stand up and be counted on this issue.”
Landed gentry to self-made millionaires
Duke of Westminster (Wealth: £7.9bn)
Gerald Grosvenor and his family owe the bulk of their wealth to owning 77 hectares (190 acres) of Mayfair and Belgravia, adjacent to Buckingham Palace and prime London real estate.
As the value of land rockets in the capital so too does the personal wealth of Grosvenor, formally the sixth Duke of Westminster and one of seven god parents to the new royal baby, Prince George.
The family also own 39,000 hectares in Scotland and 13,000 hectares in Spain, while their privately owned Grosvenor Estate property group has $20bn (£12bn) worth of assets under managemenSpaint including the Liverpool One shopping mall, according to leading US business magazine Forbes.
Reuben brothers (£6.9bn)
Simon and David Reuben made their early money out of metals. Born in India but brought up in London, they started in local scrap metal but branched out into trading tin and aluminium.
Their biggest break was to move into Russia just after the break-up of the Soviet Union, buying up half the country’s aluminium production facilities and befriending Oleg Deripaska, the oligarch associate of Nat Rothschild and Peter Mandelson.
The Reuben brothers are still involved in mining and metals but control a widely diversified business empire that includes property, 850 British pubs, and luxury yacht-maker Kristal Waters. They are also donors to the Conservative party.
Hinduja brothers (£6bn)
Srichand and Gopichand Hinduja co-chair the Hinduja Group, a multinational conglomerate with a presence in 37 countries and businesses ranging from trucks and lubricants to banking and healthcare.
They began their careers working in their father’s textile and trading businesses in Mumbai and Tehran, Iran but soon branched out by buying truck maker, Ashok Leyland from British Leyland and Gulf Oil from Chevron in the 1980s, while establishing banks in Switzerland and India in the 1990s.
The family’s London home is a mansion on Carlton House Terrace, overlooking St James Park and just along fromclose to Buckingham Palace, which is potentially worth £300m. They have links with the Labour party.
Cadogan family (£4bn)
The wealth of the Cadogans family is built on 90 acres36 hectares of property and land in Chelsea and Knightsbridge, west London.
Eton-educated Charles is the eighth Earl of Cadogan and ran the family business, Cadogan Estates, until 2012 when he handed it over to his son Edward, Viscount Chelsea.
Charles, who is a first cousin to the Aga Khan, started in the Coldstream Guards before going into the City.
He was briefly chairman of Chelsea Football Club in the early 1980s and his family motto is: “He who envies is the lesser man.”
Mike Ashley (£3.3bn)
Ashley owns Newcastle United football club and became a billionaire through his Sports Direct discount clothing chain which he started after leaving school.
He was the sole owner of the fast growing business, which snapped up brands such as Dunlop, Slazenger, Karrimor and Lonsdale, until it floated on the stock market in 2007. He now owns 62%.
Ashley is a regular visitor to London’s swankiest casinos but is famously publicity-averse
Source – Welfare News Service, 17 March 2014