GDP growth masks fall in wages and impact on union rights

Tentative GDP figures draws our attention to the fall in wages and its impact upon union rights, writes Tony Burke.


Anyone browsing the news last week could be forgiven for wiping their brows and saying: ‘Phew! Well, that’s it – the recession’s over!’ The one percent growth in gross domestic product figures looked good, but on closer examination it was merely a blip northwards.

Whilst welcome, the reality is the 1% included an ‘Olympic bounce’ through ticket sales – a total one off. Analysts also suggested the extra bank holiday contributed 0.5%, putting real economic growth at 0.3%. In fact the 1% increase means the UK’s growth was flat for 2012 and many analysts warned living standards would continue to fall.

Plus of course the positive figures were overshadowed by the ‘Ford Effect’ with the announcement of more than 1,400 job losses in the skilled manufacturing sector at Southampton and Dagenham.

As Unite pointed outthe growth is centred in and around the M25 and in the service sector. Not in manufacturing and construction, where the real drive for growth needs to come from. Construction’s contribution to the last quarter’s GDP figures fell by 2.5 per cent.

In reality, 90% of the cuts in the austerity package foisted upon the country by the coalition have yet to kick in. Plus there are big hikes in prices in the shops, increases in energy prices, and a continuing pay freeze in the public sector.

As Philip Booth, editorial director at the Institute of Economic Affairs, said:

“The difficulties faced by the UK economy are not fully reflected in the growth figures. Living standards are falling, productivity growth is weak, and the economy has, in fact, been flat over the last year. It is likely that we are leaving recession but entering a period of unspectacular recovery – quite unlike the recovery from previous recessions.”

One of the most interesting comments came from Samuel Brittan in the FT (£). Describing David Cameron’s response to the figures as “incredibly silly” he wrote he was surprised job losses had not reached 3.5 million. He reasoned this was perhaps because workers were holding back on pay claims in order to hold onto what they have got and identified “falling union membership” as a reason.

I do not think this is the case – certainly in well-organised, unionised companies workers will push for better pay deals through collective bargaining.

In the Unite manufacturing sector, the last year shows requests for ballots for industrial action on pay claims in manufacturing had grown and pay settlements were averaging around 3% to 3.5%, with the recent JLR deal of two-year pay deal which will mean up to 9.8% extra in pay packets.

Not all ballots go ahead as many are resolved via a locally agreed collective settlement. Many workers in unionised companies made sacrifices to help their companies, now they want those sacrifices acknowledged; they have seen their living standards fall and therefore are seeking decent pay deals. I believe they will continue to do so.

Instead of “falling union membership”, it is the lack of collective bargaining that has coincided with a weakening of economic growth.

As Professor Keith Ewing has pointed out on several occasions, in 1938, Ernest Brown, the Minister of Labour (in the then Tory-led government) announced in the House Of Commons it was the policy of the government to promote collective bargaining, and with it, the trade union voice:

“…a simple attempt by a thoughtful man to increase wages, equalise incomes, stimulate the circulation of money, increase demand, and promote job growth, for the good of the country and the benefit of everyone.”

Enough said?

As you’re here, we have something to ask you. What we do here to deliver real news is more important than ever. But there’s a problem: we need readers like you to chip in to help us survive. We deliver progressive, independent media, that challenges the right’s hateful rhetoric. Together we can find the stories that get lost.

We’re not bankrolled by billionaire donors, but rely on readers chipping in whatever they can afford to protect our independence. What we do isn’t free, and we run on a shoestring. Can you help by chipping in as little as £1 a week to help us survive? Whatever you can donate, we’re so grateful - and we will ensure your money goes as far as possible to deliver hard-hitting news.

6 Responses to “GDP growth masks fall in wages and impact on union rights”

  1. gordon

    and what good is growth? I’d rather we were poorer and happier. a growing economy sucks in workers from abroad which means more expensive housing and rents. I’d happily earn half my current income if I could afford a house in the city and a country pad for the weekends.

  2. Newsbot9

    That’s right, why, you can do without a third car and be happier.

    Shame that for the poor, that’s not an option. Without food, shelter and utilities people are – unsurprisingly – very unhappy. Of course you have to go on a xenophobic rant about one of the *minor* factors in housing availability, too.

    Typical rich man’s view…concerned about multiple houses, not the next meal! Of course you view Growth as a threat just like your government buddies…you might not get your full program of destroying the social infrastructure and inflicting Tory morality onto everyone done if there’s growth!

  3. gordon

    i have precisely zero houses. i rent one. and immigration is the major driver of housing issues.

  4. Newsbot9

    Yes, you can keep lying all you like, rich boy.

    In reality, a casual look at the figures shows that even with zero immigration since Thatcher ended council house building, we would have a critical housing shortage, since the private sector’s building didn’t and hasn’t significantly increased.

    You’re simply a xenophobic racist, an enemy of this country who’s ignoring the real issues the poor fsce!

  5. newton

    there’s no point building houses. england is going to be uninhabitable due to climate change. we should be taking down the houses we have and moving them to northern canada

Comments are closed.