This week MPs learned they are to be awarded a massive £7,600 wage rise—an 11 percent leap.
An MP’s annual wage rises from £66,396 to a whopping £74,000, not including their expenses.
Two thirds of MPs told spending watchdog Ipsa they felt underpaid. Although party leaders—who earn even more—have been keen to announce they are against the rise.
They are rightly worried about the reaction of voters at a time when most workers are getting below inflation rises or are suffering pay freezes.
A Joseph Rowntree Foundation study revealed this week that for the first time over half of those living in poverty in Britain are in work.
That’s 6.7 million people, an increase of 500,000 from last year. The report stated that average incomes have dropped by 8 percent since 2008.
Labour Research found that the majority of private sector pay deals in 2012-13 delivered below-inflation results.
In 2008-9 the typical private pay settlement was 4 percent. This dropped to 2.5 percent for 2012-13.
It reported that the sum of pay rises negotiated since the recession is around 13 percent. That’s less than the 15 percent rise in the Retail Prices Index (RPI).
It is also less than the Consumer Prices Index (CPI). Both CPI and RPI measure inflation. The government prefers to use CPI as it is often lower than RPI.
Workers who are members of trade unions earn more on average than non-unionised workers. This has remained the case since the crash in 2008.
This is coined as the “union premium” and shows the potential power of collective organisation.
But the only pay settlements to keep ahead of inflation since 2008 were in the energy and water sector. Cumulative wage rises in those sectors came to 16.2 percent.
At the other end of the scale was construction in the private sector. Construction workers have seen national pay freezes. Their wage rises reached a total of 8.7 percent over the same period.
The lowest cumulative pay settlements have been in the areas covered by public sector employers, so for example 7.6 percent in education and 5.3 percent in health.
With inflation at its current rates such wage rises are effectively a pay cut.
Average earnings normally run at a higher figure than pay settlements because they include extras such as overtime and shift payments. But this relationship has changed since 2011.
This shows how much workers are being squeezed in every area of pay and not just on national agreements on the basic rate.
The only way workers are going to stop the rot is to get organised and take action.
The MPs’ pay hike is an opportunity to expose the hypocrisy of the politicians who tell us austerity is necessary while they earn nearly three times the national average wage. It should also be a spur to action.
Any section of workers that fights against below-inflation deals or pay cuts by stealth can lay down a marker for millions of other workers struggling.
Low pay is not inevitable
The Tories and the bosses have used the economic crisis to launch an ideological offensive to make people accept that low pay is inevitable.
Low pay can be imposed in different ways.
The imposition of flexible or zero hours contracts mean people only get paid when their employers are busy and offer them work shifts.
Many public sector workers have been denied “pay progression” where workers receive an increment at the end of each year in a job, in recognition of the greater experience they have.
Around 1.4 million workers are “underemployed”. That means they work part time but want to work full time.
It’s the highest figure in 20 years.