Pay freezes are driving down living standards, while the rich get richer

15 May 2013

 

Public services union UNISON today released a report showing how pay freezes are contributing to sharply declining living standards for workers in vital services.

UNISON contrasted the increasing wealth of the richest with the “triple whammy” of frozen pay, inflation and tax and benefit changes affecting ordinary families.

Dave Watson, Head of Bargaining and Campaigns, said the impact is “bad for families, bad for services and bad for the economy.”

He added: “Any serious economic recovery will involve boosting demand, partly by providing fair pay settlements for workers in public services.”

Stephanie Herd, chair of the union’s Local Government Committee, said: “Council workers across Scotland have in effect had their pay cut through the pay freeze. This report confirms just how much of a hit they are taking. It shows why the current local government pay offer is not enough and has been rejected by our members.

“We need an end to the pay freeze and fair pay for workers, who we know will spend their money locally, boosting the economy in the process.”

She added that only the implementation of Living Wage policies across much of the public sector in Scotland has offered any respite to workers hit by the assault on their living standards.

On pay, median gross weekly pay in Scotland in 2007 was £360.20. This had risen to £396.10 by 2012. If it had increased in line with inflation, it would be £423.22 by 2012. A worker earning median pay (exactly halfway along the income distribution – half earning more, half earning less), is therefore 6.4% or £27.12 a week and £1410.24 a year worse off.

Inflation as it is experienced by lower paid workers is higher than indexed levels and hurts more. Inescapable essential expenditure items like food, fuel and transport have all risen far higher than the CPI in recent years.

Meanwhile the combined impact of tax and benefit changes will mean a 1% drop in income for the bottom 30% of households and 2% for households with one earner and two children.

In sharp contrast the wealthiest, as measured by the Sunday Times Rich List, recorded rises in wealth of 18%, 4.7% and 8.7%, very comfortably above inflation for each of the last three years. Their collective wealth is nearly £450 billion, more than three times the UK deficit.

Dave Watson UNISON Head of Bargaining and Campaigns said: “These figures confirm what our members know from their pockets and purses - wages aren’t going as far they used to.

“While our members struggle to provide services with ever fewer resources and then to pay their bills when they get home, those at the very top are getting richer and richer.”

 

Notes to editors:

1. UNISON is Scotland’s largest trade union representing 160,000 members working in the public sector in Scotland.

2. Full figures are in the new ‘ Briefing on Wages, Inflation and Inequality’, online at  www.unison-scotland.org.uk/briefings/b034_BargainingBrief_WagesInflation+Inequality_May2013.pdf

 

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