Low pay: the road to ruin

Listen to a member of the current Government speak about incentives to work and you’ll notice that one issue is conspicuous by its absence: Pay. Nothing captures the upside-down world of Austerity Britain better than Ian Duncan Smith telling us that the benefits system is the root of all our troubles. Ministers, most of whom have never known the hopelessness of poverty wages, speak about the issue with robotic unfamiliarity.

The Coalition has tied itself in an ideological knot over the issue of pay. They refuse to boost the National Minimum Wage to a respectable level because of subdued economic growth and a fragile employment market, a situation created by their own failed economic policy. On public sector pay they make the same mistake, propagating the myth of a pay premium, and holding down wages for hard working nurses, teachers and carers. Some Tories are even talking about imposing a National Minimum Wage Holiday – a jolly euphemism for cutting the pay of some of the poorest people in our society.

Instead of seeking to inject demand into the economy, the government has gone about stripping it away. Stagnant wage levels depressing consumer demand, leading to less investment and falling productivity.

What our economy needs is the stimulus of increased wages – particularly at the lowest levels. Objections which raise the spectre of higher unemployment are, at best, over-cautious. At worst they are a cynical attempt to divert attention away from measures that would boost the economy and redistribute wealth. As the IFS reported last week, workers in the UK have suffered an unprecedented pay cut of 6% in real terms over the last five years. This can’t go on.

Today, at UNISON’s National Delegate Conference, the Resolution Foundation and the New Economics Foundation will address UNISON members on the new politics of pay. Our union is at the forefront of the campaign to show that there is a workable and ethical alternative to depressed wage levels. For example, UNISON’s campaign to raise the National Minimum Wage to a Statutory Living Wage would save taxpayers £2 billion a year, stimulate the economy and put money in the pockets of those who need it most. In public services, we are making the case for ending the pay freeze and cap – not because our members are a special case, but because their family budgets are at breaking point.

Trade unionists across the economy are right to insist on fairer pay deals, not just because they would benefit their members, but because they would help lift us all out of the flat-lining growth levels which have characterised this decade so far. The title of the new TUC campaign puts it very well indeed: Britain needs a pay rise,

The point here is to realise that we have a choice. There is nothing inevitable or praiseworthy about holding down pay. It hits the poorest hardest and it holds back economic growth. The experience of the last few years has proven once and for all that you can’t cut your way out of a recession. George Osborne, Nick Clegg and David Cameron should not let dogma blind them to the fact that their economic policies have been failing.

They need to wise up and start pursuing policies that put money where it will make a real positive difference – the pay packets of Britain’s workers.

Karen Jennings is Assistant General Secretary of Unison. This piece forms part of our coverage of Unison conference, which is taking place in Liverpool this week