Inflation—according to official figures—is falling. But don’t let the bosses and the Tories now get away with small rises in pay, benefits and pensions.
The government’s preferred CPI rate of price rises was 6.8 percent in the year in July, according to the official figures released on Wednesday, The more accurate RPI measure, which includes housing costs, was 9 percent.
Core inflation—stripping out food and energy prices—was still rising at an annual rate of 6.9 percent. Inflation is the rate at which prices are rising. A drop in inflation does not mean prices are falling, but just that the rate of increases is slowing.
Many prices are going up much faster than these numbers suggest. The same set of official figures showed food and non-alcoholic beverages going up 14.8 percent.
The statistics underline that when bosses still want to push through pay deals of 4 or 5 percent—or less—they’re demanding pay cuts. If workers want a marker for wage increases, the big four British-based banks have published combined profits of over £29 billion for the first six months of 2023. That’s up 77 percent on last year.
Unite union general secretary Sharon Graham said on Wednesday, “The government, the Bank of England, and profiteering corporations will try to use today’s inflation figures to tell people the crisis is over. But workers won’t be fooled while they see prices and profits continue to rise faster than wages.”
Graham is right, but all the union leaders have to fight for pay deals that at least match RPI inflation—and more on top to catch up with previous cuts.
On Tuesday the whole of the media suggested wages are soaring. The BBC’s report was typical. “Wages grew at a record annual pace in the April to June period, according to new official figures,” it said.
It went on, “Regular pay rose by 7.8 percent, the highest annual growth rate since comparable records began in 2001.”
The most glaring mistake is that this figure was still below inflation for the relevant period—even with the CPI index, let alone the RPI one. So wages in real terms were falling, not rising.
It’s 100 years since hyperinflation swept Germany and living standards collapsed. As workers used wheelbarrows, sacks and suitcases to work to collect their wages, some pro-boss newspaper probably reported, “Pay is up at record levels.”
A dive into the figures shows other ways they are skewed. For example, the finance and business services sector saw the largest annual regular growth rate at 9.4 percent. For workers in the accommodation and food service the “rise” was 5.6 percent.
And a big factor in “the growth in the public administration sector” was a one-off payment to civil service workers. But this won’t be carried forward as the basis for future rises.
The New Economics Foundation noted, “British workers have missed out on 15 years of wage growth and we’re all poorer as a result. Wages are around £1,000 lower than they were in 2008. And around half a million people have left the workplace—most of them due to sickness—which is rising rapidly.”
The attacks on living standards would have been even worse without strikes. In the past two years, there has been a level of industrial action in Britain not seen since the 1980s. In the 12 months to May 2023, there were 3.9 million strike days—compared to an average of 450,000 per year during the 2010s. This is more than at any point since 1989.
This has happened despite the union membership falling to 22 percent of employees in 2022, down significantly from 39 percent in 1989.
Of course, the level of strikes in the 1970s was much higher than it is now. In some years, the number of days lost to strikes was more than eight times higher than has been the case over the past year. And that was at a time when the size of the workforce was 25 percent smaller.
And, because union leaders have held back strikes, there have not been the clear victories needed to shift the balance of power between workers and bosses.
The Bank of England is likely to see the core inflation numbers, and the wage figures, as more reasons to put up interest rates again. This will mean higher rents and mortgages. There is a very real risk that government decisions over interest rates mean a recession—with bankruptcies and soaring unemployment—may soon hit working class people.
Join the Workers’ Summit
On Saturday 23 September a “Workers’ Summit” is meeting in-person in London around the slogan, “Link the fights, reject bad deals, fight to win!” Organisers describe it as “an afternoon for grassroots collaboration”. It was initiated by Lambeth and Hackney NEU, NHS Workers Say No and Strike Map.
The summit will host discussion but can also strengthen the networks of resistance at the base of the unions. It’s essential for everyone enthused by this year’s strikes but know we need more.Original post