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
Almost a quarter of workers in the North East aren’t paid enough to live on, a new study reveals.
The report by the Living Wage Commission says that the employment market is “polarising” with high paid and low paid jobs both increasing – while the number of middle income jobs shrinks.
But workers on lower salaries have suffered, seeing their wages fall in real terms since 2005, the report says, while the cost of necessities such as food and fuel have shot up much faster than the official rate of inflation, leaving many working people struggling to make ends meet.
The grim warning was presented by the Living Wage Commission, an independent body chaired by Dr John Sentamu, the Archbishop of York, and backed by the TUC, chambers of commerce and voluntary groups.
It is campaigning for every worker to be paid the “living wage”, a sum calculated to be the minimum needed to ensure a basic but acceptable standard of living. The 2014 rate is £7.65, or £8.80 in London.
In a new report called Working for Poverty, the Commission said there were 221,000 workers in the North East earning less than the living wage, or 23% of those in work.
This is the same proportion as in the North West and West Midlands, while the figure for Yorkshire and Humber is slightly higher at 24%.
But by contrast, just 18% of South East workers earn below the living wage, and the figure in London is 17% even though the living wage is higher.
Newcastle City Council was the first local authority in the country to introduce a living wage, ensuring no staff were paid below the sum, and others, such as Northumberland, have followed suit. Labour leader Ed Miliband backs the living wage while leading Conservative supporters of the policy include Hexham MP Guy Opperman.
But Dr Sentamu said more employers should adopt the policy, and he argued that paying higher wages would save the Treasury money because it would cut the benefits bill.
He said: “For the first time, the majority of people in poverty are actually in paid employment. The nature of poverty in Britain is changing. The idea of ‘making work pay’ increasingly sounds like an empty slogan to the millions of people who are hard-pressed and working hard, often in two or three jobs, and struggling to make a living.
“Meanwhile, the whole of the UK picks up the bill in tax credits, in-work benefits and decreased demand in the economy.”
Dr Sentamu added: “We know that not every employer could afford to implement a living wage right now. Yet we also know there are definitely employers that are able to pay a living wage but choose not to.”
The jobs where you are most likely to be paid below the living wage are barman or waiter. According to the report, 85% of people in these roles are underpaid.
Other jobs with a high proportion of workers below the living wage include catering assistant, vehicle cleaner, dry cleaning assistant, shop assistant, cleaner, hairdresser and florist.
Nationwide, 27% of female employees nationwide are paid below the living wage, compared to 16 per cent of men.
TUC general secretary Frances O’Grady said: “Low pay is blighting the prospects of millions of workers, and we need urgent action to tackle the low-pay problem.”
Source – Newcastle Journal 11 Feb 2014