Since the recession began in 2008, real incomes have gone into reverse. Inflation has eroded the purchasing power of wages and salaries. Pay rises have rarely matched the inflation rate in the private sector and the austerity incomes policy imposed by the Government on the public sector has shrunk the real value of wages.
Meanwhile, at the World Economic Forum in Davos at the end of January 2013, the German Chancellor, Angela Merkel, insisted that it was vital to keep driving down labour costs to make Europe more competitive.
Is all this inevitable? Can we get back to pay rises that match or exceed inflation? Can the growing income inequality be resisted? On 6 March 2013 experts in pay and bargaining, trade union negotiators and policy officers are meeting at the annual pay forum organised by IDS and the TUC. Those attending will be looking for ways to reverse the steady decline in real pay levels.
Last year the CBI claimed that we are in a period of ‘new normal’ – of pay freezes and low wage rises. Maybe that is what the CBI would like to see, but there is an alternative. Indeed, a significant number of private sector pay rises were at 3 to 5 per cent in 2013, particularly in manufacturing – so pay freezes and low wage rises are not inevitable.
The CBI also knows that the biggest companies in the UK are sitting on a cash mountain of £70 billion which they are not investing until economic recovery becomes more certain, such is their concern for the damage the austerity agenda is having on the economy. At the same time, the stock market has been rising in recent months, buoyed up by the anticipation of higher dividend payments to shareholders.
Higher pay awards would lead to higher consumer spending which would fuel a rebound in consumer confidence. Discuss. Yes, the delegates will discuss this, and a range of other topics, including what is happening to employment rights and whether ‘agency working’ is the new norm. We can see that there remains a mix of strong full-time employment at the same time as more casualization and outsourcing. Can unions negotiate permanent status for agency staff?
In one session there will be a focus on the use and abuse of pay and inflation data. Since the recession began all sorts of wildly inaccurate claims have been made about public sector earnings being 40 per cent higher than in the private sector, about regional pay differences, and how all pay in the private sector is set at local level. Much of the backing for these arguments is built on the misuse of official pay and labour market data.
The pay forum will also hear about the new measures of inflation being introduced by Government and will challenge the idea that the RPI might be downgraded as an inflation measure.
In the final session there will be a focus on national bargaining and the union response to fragmentation of pay bargaining in both the private and public sectors. Speakers will examine the lessons from the electricians’ pay dispute last year and the tanker drivers’ dispute. There will also be speakers looking at potential dangers to pay fragmentation in schools and the NHS.
The forum will bring together 80 delegates and speakers with wide experience from different backgrounds, but with a strong focus on pay and bargaining. They will produce ideas and arguments to carry forward into 2013. Some of it is about facts and figures and some of it is about analysis and perspective. All of it is about challenges that lie ahead.
Building Knowledge and negotiating Change: The IDS and TUC Pay Forum is at Congress House on Wednesday 6 March 2013