From the TUC

Britain still needs a pay rise

16 Jan 2014, by in Economics

George Osborne’s politically clever intervention on the minimum wage (timed to steal the thunder from Ed Miliband’s major speech tomorrow on economic policy) will do the business as far as getting him the headlines he wants. (As I write this post, Nicola is penning a deconstruction of his announcement, please read this for a through critique.)

But I wonder if this may be another example of the Chancellor being clever in the short-term, but less so in the long. Of course, the TUC and the trade union movement will be pleased that even the government can see the case for a real rise in the minimum wage. We have, after all, been saying this for some time.

But we can also see that this admission strengthens the case for real wage increases for all workers. As we’ve been arguing, its a long time since earnings kept up with inflation:

LFF chart

Low-paid workers have the strongest social justice case for an above-inflation increase, but all workers need a pay rise. All workers are struggling with the cost-of-living crisis, and we need across-the-board increases to get the economy going again. It is possible that Mr Osborne may come to regret recognising the cost-of-living squeeze we all face, effectively endorsing the trade union claim.

But if we are going to win a real pay rise this year, it’s going to take more than the miscalculations of one politician. Union members and their pay negotiators will have to win higher increases from employers. That’s why I hope to see an increased turn-out at the annual Pay Bargaining Forum we organise with Incomes Data Services. This year’s will be at Congress House on 25 February (more details here) and we’ll be looking at practical issues – like best practice in pay benchmarking and dealing with the public sector pay freeze – at the same time as we discuss how to win a better pay system so that all workers win a decent pay rise every year.