12 August 2013

Pay fall figures show Labour's economic stupidity

Labour have been bragging about how UK pay has fallen over recent years compared to our European neighbours.

But unsurprisingly they fail to make any reference to the numbers of people out of work all together.  But the following chart from Reuters might help them to understand the bigger picture.

Nearly all the major economies in Europe have higher unemployment than the UK and nearly all of them - despite recession have seen wages fall less than the UK (or even rise).  The exceptions are Germany (which hasn't been in recession and seen a very small rise in pay levels) and the Netherlands (which has seen pay fall by further than the UK, but has lower unemployment).

So even though most UK employees have seen their pay squeezed, they have generally kept their jobs.  But for Labour that isn't the right policy - they would rather another 750,000 workers sit on the dole so the UK could enjoy French levels of unemployment so that those still in work could enjoy an 0.7% pay rise.

And there's one other fact that Labour might not want to publicise from their own research - those people in the public sector enjoy substantially higher pay than those in the private sector and have seen their pay drop by half the rate of those in the private sector.  So it will be interesting to hear their justification for the substantially better terms, conditions and (particularly) pension rights public sector employees continue to enjoy, when the IFS say, "In 2009, the average public-sector worker earned about £16.60 per hour, which dropped to about £15.80 in 2011, while, hourly pay for private-sector workers in 2009 was just over £15.10 and dropped to about £13.60 in 2011."

1 comment:

  1. They closed my entire department down this year as a result of privatisation. I'm now working in another job with a 20% pay cut and a zero hour contract and I don't even show up in these statistics. At the same time, the vice-chancellor of my university got a £72,000 pay rise. Same pattern across academia. It even happens in the NHS: 10-18% pay rises for senior staff at Winchester hospital, was it? And across the country, 2% pay rise for senior staff while the nurses enjoy a pay freeze. And then there's the terribly embarrassing 12% pay rise that MPs are staring in the face, the poor dears.

    You suggest that the equation that governs pay reduction is

    total funding=pay * number of jobs

    therefore number of jobs goes up as pay goes down since total funding remains static. That is not accurate. What we're actually seeing is a far more complex equation:

    total funding = senior pay * number of jobs + employee pay * number of jobs [and hours, and job security, etc]

    Senior pay is going up, in many cases quite radically. Employee pay (and security, and hours, and pension) is going down, in many cases quite radically. You could argue that it doesn't make a real difference since there are so few senior staff, I suppose. You could even argue that senior staff deserve the money for their performance, although I personally would laugh in your face.

    You argue that employees should be jolly happy to have anything at all, be it ever so humble ('whaddya want? you got a job!'). I would say you're seriously oversimplifying the issue. Sure, so are Labour, but so what? These are real peoples' lives you're pontificating about, all of you political parties, and I suggest that all of you should strive to do better than that.