Fall in wage value hitting economy as well as households, says new report

By staff writers
13 Feb 2013

A new report, 'Britain needs a pay rise', published on 12 February 2013, argues the fall in the value of pay in Britain is a major obstacle to an economic turnaround.

Indeed, workers have been robbed of some £50 billion in lost wages since 2008, it claims. This has hit the UK economy badly, as well as making life tough or worse for working families.

The latest figures show that since the onset of recession in 2008, the real value of wages has fallen by seven per cent, or more than £50 billion a year. During the same period there has also been a real terms drop in consumer demand of five per cent.

Analysis from the Public and Commercial Services Union (PCS) also challenges the government's claim that civil servants are paid more than their private sector counterparts.

Using data from the Office for National Statistics, research by the Institute for Fiscal Studies, government departments, employment specialists Croner and Incomes Data Services, and the Resolution Foundation, other findings in the report include:

* The government's four-year pay policy, plus the increase in pension contributions, will cut almost £7 billion a year from the value of public sector employees' pay by 2015
* Median pay in the civil service is 4.4 per cent, or £1,263, lower than median pay in direct private sector comparators
* At executive officer level civil service pay was 10 per cent below private sector comparators and at administrative officer level it was eight per cent
* These discrepancies in pay for executive officers and administrative officers are found in every nation and region in the UK

The report "aims to generate a serious debate about the effects of low pay and government pay policy on the UK economy," says PCS.

While ministers are not able to increase wages across the whole economy, increases in public sector pay and the national minimum wage - and support for the extension of the living wage by insisting on it for government contracts - would stimulate demand and act as a catalyst for the private sector, the union says.

PCS General Secretary Mark Serwotka commented: "Almost everyone can now see that austerity is not working. The chancellor George Osborne is borrowing more for failure, we are on the verge of a triple dip recession, food banks are on the rise and pay day loan sharks are preying on the vulnerable."

He continued: "We believe the government's pay policy, built on the lie that hardworking civil servants are paid too much, is having a seriously damaging effect on the whole economy."

"Instead of burying their heads in the sand and hoping for the best, ministers can and should act now to put money into people's pockets and back into our economy," said Mr Serwotka.

The Public and Commercial Services Union (PCS) is one of the largest trade unions in the UK, with around 270,000 members.

* The PCS report, 'Britain needs a pay rise', can be viewed and downloaded as a *.PDF Adobe Acrobat document here: http://pcs.org.uk/download.cfm?docid=1D953BA4-ABC9-4A78-BCA59530A57506C6

* 'Austerity isn't working: There is an alternative', by the Public and Commercial Services Union: http://www.pcs.org.uk/en/campaigns/campaign-resources/austerity-isnt-wor...

[Ekk/3]

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