Dim light ahead for lowest paid
As Duncan has pointed out, the ITEM Club’s Outlook for UK Consumer Spending has been reported as ‘good news’ when it actually forecasts zero growth for 2012. And it’s bad news for low-paid workers, who look likely to gain much less than everyone else.
The ITEM Club’s hopes for growth are mainly pinned on a boost to consumption when falling inflation finally delivers a real-terms increase in wages, and the low-paid look set to gain least. The authors expect the lowest-paid third of workers’ income growing by 2.2 per cent this year, falling to 1.5 per cent in 2013. By contrast, the middle and top thirds can expect 3.1 per cent this year, rising to 3.6 per cent next year.
The government claims that low paid workers will be helped by the increase in the personal allowance for income tax, but the ITEM Club expects the higher paid groups to gain most, while
A significant proportion of the lowest third are outside the reach of the changes to the personal allowance
And, as the authors add, high unemployment is holding down wages in low skilled jobs. It is time for the government to realise that the personal allowance increase is not an adequate response to the deteriorating position of low-paid workers.