Working class people’s living standards could take a further hit with warnings that inflation could rise above 2 percent.
Inflation rose by 0.7 percent in the 12 months to January as prices for food and other goods and services rose. This was up from 0.6 percent last December, according to figures released by the Office for National Statistics.
Inflation means the money in ordinary people’s pockets doesn’t go as far.
The situation is worse than the official stats suggest.
The Bank of England uses the bosses’ preferred measure of inflation, the Consumer Prices Index (CPI). It was brought in as part of a drive to pressure governments to stick to “fiscal responsibility”—to keep spending on public services down.
But the older Retail Prices Index (RPI) rate, which includes some housing costs, gives a better indication of what people pay for goods and services. The RPI rose by 1.4 percent over the last 12 months—which is double the rise in CPI.
Even if a worker accepted a 1 percent wage “increase”, it would actually amount to a 0.4 percent cut in their income.
If inflation rises to 2 percent, any union that has accepted a pay increase of less than that has negotiated a pay cut.
The rise in inflation has thrown down a challenge to the unions to fight for proper pay rise.
The Unison, Unite and GMB unions have submitted a pay claim for school and council workers for a “substantial” rise of at least 10 percent in April. The three unions, which represent 1.4 million council and school workers, say “staff working in local government have seen up to 25 percent wiped from the value of their pay”.
Jim Kennedy, Unite’s national officer for local government Unite, said: ‘We are sick of the employers’ crocodile tears.
“They’re refusing to recognise the contribution our members make in caring for the elderly and vulnerable.
“They are on the frontline, endangering their lives every day, but the response has been pay freezes, cuts to services and jobs.
’Ministers pledged to support local government, but words are cheap. The employers should show courage and demand the proper level of funding that is desperately needed, including a fair pay increase.”
They are right to demand an inflation-busting pay increases to protect workers’ living standards. But the union leaders’ words must be backed by action to force the Tories and bosses to pay up.