By Charlie Kimber
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Prices are rising 9 percent a year — union leaders must combat cost of living crisis

Even the bosses’ preferred measure of inflation, the CPI, hit 7 percent showing the scale of the cost of living crisis
Issue 2801
A graphic shows a drawing of a person's head caught in a vice, while and arrow points diagonally upwards, left to right, like the line of a graph indicating inflation and the cost of living crisis

The cost of living crisis will put us all under pressure

Prices are rising at an average of 9 percent a year according to the most accurate measure of inflation, the RPI index. 

So if your pay, benefits or pension are going up less than that—as they are for nearly everyone—then you are taking a hit. For example, if you are on benefits and have just had the 3.1 percent “rise” imposed this week, in reality it’s a cut of nearly 6 percent. That’s disastrous for people who are already on the edge of being able to survive.

Even the government’s favourite CPI inflation measure, which excludes some basic costs, hit 7 percent. That’s ten times the 0.7 percent recorded in March 2021, according to data published by the Office for National Statistics on Wednesday.

The detail of the figures shows most types of food saw annual increases above 5 percent, including bread, meat, milk and fruit. Also on Wednesday Tesco said it doubled pre-tax profits to more than £2 billion last year. These firms and their bosses are raking in money as prices soar.

Official statistics predict people’s real income will fall this year at the sharpest rate since records began in the 1950s. Prices of many items rose at a double-digit annual rate, including furniture, cooking oil, clothing and household utensils. Gas prices were 28.3 percent higher in March than a year ago, while electricity was 19.2 percent higher. And this is before the soaring increases announced in April.

Earlier this week, an official report on pay showed the greatest fall in the value of real wages since June 2014. That’s bad enough. But those figures, just like the official inflation ones, overstate pay rises and understate how the Tories and bosses are strangling living standards. 

What look like pay increases have been boosted by special factors during the pandemic, according to the Resolution Foundation think tank. 

Official statistics say in January pay excluding bonuses grew by an annual rate of 4.1 percent. But the Resolution Foundation’s analysis shows these numbers were boosted by the end of the furlough scheme in September. Furloughed workers received 80 percent or less of their usual pay, boosting growth rates as they returned to full pay. 

After adjusting for the furlough schemes and for factors such as the rise in the number of low-paid workers as hospitality and retail reopened, underlying wage growth averaged only 2.7 percent in 2021. Nye Cominetti, senior economist at the Resolution Foundation, said that headline figures “give a misleading impression of pay growth”.

These facts, and the social emergency that lies behind them, have to be a spur to struggle. And the Tories’ shattering crisis over lockdown parties and tax-dodging should make everyone more confident to hit back and win.

After the latest inflation numbers came out, Unite union general secretary Sharon Graham addressed the need to respond. “The double whammy of soaring inflation and falling wages is creating an historic cost of living crisis for workers,” she said. “The bankers and big business are trying to force workers to pay the price for the pandemic.”

Graham rightly added, “The only way workers can fight for ‘a better share of the pie’ is by building union strength and the power of collective bargaining. It’s not complicated.”

Indeed, it’s not complicated. But turning it into reality is another matter as many union leaders tell workers to accept rises that are far below the rate of inflation. Graham said, “Unite’s numerous recent wins on wages” were a model.

But these include what Unite calls a “massive win” at DHL Aberdeen. The reality is the deal was 8 percent this year on all rates of pay and 5 percent in 2023. That’s far more than most agreements at the moment, and it shows union organisation is a plus. 

But in reality this year’s “rise” is definitely a real terms pay cut and next year’s might be even greater. Multi-year deals are a trap at the moment, potentially leading to big real pay reductions in the future. Unions should be pushing for pay rises that are “RPI plus”. 

These figures emphasise the necessity for the PCS union leadership to move quickly to a ballot for strikes among civil service workers. And the present strikes, including over pay, in the universities, have to escalate not end as the cost of living crisis deepens.

Every union leader has to be pushed to make real the brave words about not accepting pay cuts. And if the leaders won’t do it then workers have to organise independently to force the union to fight. 

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