Using the Financial Crisis To Force Down Lower and Middle Wages

We have featured on this blog the way the Coalition government is blaming the recession on welfare benefits recipients, and using the current economic crisis to make cuts in welfare payments, but they have also taken the opportunity to cut wages, for the lower and middle section also. A recent report by the TUC highlights this policy.

The report finds that almost 80% of the jobs created in the UK since June 2010 have been in low paid industries, i.e. paying less than £7.95 per hour. It goes onto say:

Retail has made the biggest contribution to rising employment levels, with the number of employee jobs in this sector increasing by 234,000. The average wage in retail is just £7.35 an hour. Residential care, where the average wage is £7.78 per hour, makes the second biggest contribution of 155,000 jobs.

Just over one in five (23 per cent) net new employee jobs created since June 2010 has been in the highly paid computer programming, consultancy and related services industry, where the average hourly wage is £18.40. The workforce in this sector has grown by 131,000.

In middle-paid industries, which account for nearly three-quarters of the UK workforce and where the average wage is between £7.95 and £17.40 per hour, there has been no net job creation since June 2010. While some industries, such as legal and accounting have created jobs (135,000), others such as public administration (-160,000) and social work (-68,000) have shed them.

High-paid industries were hardly affected by the recession, with the number of jobs falling by just 0.9 per cent. There are now a record 900,000 employee jobs in high-paid sectors.

On top of this, public sector workers, who are by and large low to middle earners, have had pay freezes and pension contribution increases over the last five years, with the increasing use of short term contract and agency staff at even lower wages. Private sector workers have also had pay freezes and reduced hours, as their employers piled huge amounts of cash reserves (over £300 billion at the last count, not including the banks).

Then as The Guardian reports we have one million workers employed on zero hours contracts across the country, meaning that they are paid when required like the casual hiring of dock workers in New York in the 1950’s, immortalised by Marlon Brando in the film On the Waterfront. No sick pay, no holidays, no pay when not required.

It should come as no surprise that most low paid workers are women, and are disproportionately affected by the forcing down of these wage rates, as this Coalition government is deeply misogynistic and so it is at best ambivalent to this outcome.

Wage rates have been falling though since 2003, under the previous Labour government, though not so sharply, but the gap then was taken up by increasing property prices, where people borrowed against their rising house value to fuel the economy in buying consumer goods. It appears that the current government is attempting to revive this approach with ‘help to buy’ guarantees on home loans, seemingly learning nothing from the debt ridden causes of the 2008 and continuing recession.

All of this while boardroom pay and bonuses rocket.

The future employment prospects for most UK workers will be of low pay, few benefits and generally insecure.  Further legal curbs on the trade unions, and a ‘loosening’ of employment law, with higher fees for employment tribunals thrown in.

A low waged economy where what can be outsourced to China or India cheaper will be and what by some necessity needs to be based in the UK, will be low paid and insecure for most workers, if they can find work at all.

A future where in the first generation since World War 2, the children will be poorer than their parents, rolling back all the social progress in living standards that was achieved in the last century.

Let’s not go down meekly; we can at least put up a fight.