Austerity won’t be over until...Theresa May tackles the wage growth crisis

Author
Published date
23 Oct 2018
If the government really wants to end austerity for working people, next week's Budget must address the longest squeeze on real wages in two centuries

At this year’s Conservative Party conference, Theresa May announced with much fanfare that austerity was “over”.

Next week’s Budget will be the first chance to see if she meant what she said.

After eight long years of cuts, the number of people in insecure work is too high, pay growth is weak, and low pay is widespread.

That’s why we’re clear that austerity won’t be over for working people until the government increases job security and tackles stagnating wages.

We want to see decent jobs, pay and living standards right across the country.

Insecure work

Insecure work is now a daily reality for millions in the UK.

Too many people can be sacked without notice. Too many people don’t know how many hours they will be working week to week. Because of this, many people face uncertainty about how much will be in their pay packets.

TUC analysis shows there are around 3.7 million UK workers in insecure forms of employment (agency, casual, seasonal, zero-hours contracts work and the low-paid self-employed).

The government’s failure to respond to the Taylor Review and the Director of Labour Market Enforcement’s proposed strategy means that much-needed employment law reform is being neglected.

That’s why we’re calling on the government to urgently:

  • Extend employment rights to all workers. Only working people classified as “employees” are entitled to important rights such as the right not to be unfairly dismissed and family friendly rights such as paternity leave.
  • Close the loopholes in the Agency Worker Regulations (such as the Swedish Derogation) so that agency workers doing the same job as colleagues on permanent contracts, receive the same pay.
  • Ban zero-hours contracts, making sure that workers have access to an employment contract that guarantees their working hours.
  • Provide additional funding for the state led enforcement agencies, giving them the resources they need to protect working people and enforce their employment rights.

Tackling Low Pay

TUC analysis shows that the UK will be among the worst performers for wage growth in 2018 and will be fourth from bottom in 2019 (OECD countries):

Chart showing OECD compensation per employee, forecast annual percentage change 2019
The UK is near the bottom of the OECD wage growth league

UK workers are suffering the longest squeeze on real wages in modern history.

A decade on from the financial crisis, real wages are worth £24 a week less than they were in 2008.

By the time they are forecast to return to their pre-crash level in 2025, real wages will have been in decline for 17 years.

This is the longest period since the beginning of the nineteenth century.

The government must not sit idly by while pay stagnates and workers miss out on wage increases.

There are two key actions that ministers should take to trigger the wage increases that are vital for working people:

  1. Increase the minimum wage to £10 as quickly as possible to increase pay for low earners and boost economic demand.
  2. Strengthen collective bargaining rights and allow all unions access to workplaces so they can explain the benefits of joining.

The combination of job insecurity and stagnating wages, especially in the context of wider austerity measures, has caused great uncertainty, anxiety and financial hardship for too many working people.

The Prime Minister guaranteed to enhance employment rights for working people.

Austerity won’t be over for them until she delivers it.