Britain needs a pay rise to kickstart growth

The following article has been reproduced with the kind permission of PCS – Public Commercial Services Union

Why is employment rising when the UK economy is still flatlining? Our new research could provide the answer.

Figures show that since the onset of recession in 2008 the real value of wages has fallen by 7%, or more than £50 billion a year. During the same period there has been a real terms drop in consumer demand of 5%.

Our report, ‘Britain needs a pay rise’, published today (Tuesday 12), argues this fall in the value of pay could be a major obstacle to the return of economic growth.

The report also busts the myth that civil servants are paid more than their private sector counterparts.

Serious debate on pay

Using data from the Office for National Statistics and research by the Institute for Fiscal Studies, and government departments, employment specialists Croner and Incomes Data Services, and the Resolution Foundation, other findings include:

  • The government’s four-year pay policy, plus the increase in pension contributions, will cut almost £7 billion a year from the value of public sector employees’ pay by 2015.
  • Median pay in the civil service is 4.4%, or £1,263, lower than median pay in direct private sector comparators.
  • At executive officer level civil service pay was 10% below private sector comparators and at administrative officer level it was 8%.
  • These discrepancies in pay for executive officers and administrative officers are found in every nation and region in the UK.

The report aims to generate a serious debate about the effects of low pay and government pay policy on the UK economy.

It comes as 250,000 of our members who work in civil and public services start voting in an industrial action ballot over cuts to their pay, pensions and terms and conditions.

We have asked for a pay rise for civil servants of 5% or £1,200 and for the living wage to be written into government contracts with private sector employers.

Money in people’s pockets

While ministers are not able to increase wages across the whole economy, increases in public sector pay and the national minimum wage – and support for the extension of the living wage by insisting on it for government contracts – would stimulate demand and act as a catalyst for the private sector.

PCS general secretary Mark Serwotka said: “Almost everyone can now see that austerity is not working. The chancellor George Osborne is borrowing more for failure, we are on the verge of a triple dip recession, food banks are on the rise and pay day loan sharks are preying on the vulnerable.

“We believe the government’s pay policy, built on the lie that hardworking civil servants are paid too much, is having a seriously damaging effect on the whole economy.

“Instead of burying their heads in the sand and hoping for the best, ministers can and should act now to put money into people’s pockets and back into our economy.”

Click here to download the full report.

Consumer confidence fell to six-month low in October

As many predicted, the direct result of the government’s savage austerity measures, saw the UK economy suffer a double dip recession. But how many foresaw a triple dip; it’s now looking a distinct possibility. The cuts are hurting; they are not working. Whilst people are losing their jobs; seeing their pay frozen or cut and going hungry and cold, the government pontificates about “handing £58bn of Whitehall cash to city-based engines of growth, co-ordinated by businesses and local councils” whilst still advocating their deficit reduction strategies and the destruction of the public sector / services, the NHS and the Welfare State.

Below is an article from The Retail Bulletin


UK consumer confidence slipped to a six month low in October as households became more pessimistic about their financial situation over the coming 12 months according to a survey by GfK NOP.

The GfK Consumer Confidence Index dipped to -30 in the month from -28 in September. This was the lowest reading since April.

While the index measuring changes in personal finances during the last 12 months decreased three points to -24, the forecast for households’ expectations for the next twelve months fell five points to -13. This is three points lower than October 2011. The survey also revealed a reluctance to invest in major purchases with the index dropping two points to -33 in the month, one point lower than this time last year.

The index measuring the expectation for the general economic situation over the next 12 months decreased to -29, two points higher than October 2011. The ‘now is a good time to save’ index increased one point to -17.

Nick Moon, managing director of social research at GfK, said: “Just as the economy moves out of recession consumer confidence dips again. While we are not quite back to the levels of this time last year, the Index has not been this low in six months.

“While the Olympics are thought to have boosted GDP in the last quarter, the late Summer boost in consumer sentiment has now faded. The government will be concerned that the economic bounce will follow a similar path and deflate during the Autumn.

“The fragility of the recovery is underlined by the fact that people are more worried about their own financial situation over the next 12 months. This certainly doesn’t suggest there will be a spending boom on the back of the official emergence from recession.”

The GfK survey was conducted amongst a sample of 2,004 individuals aged over the age of 16 between 5 and 14 October 2012.


More than 100,000 jobs lost in South West since start of the recession

More than 100,000 jobs have been lost in the South West since employment peaked in the third quarter of 2007, according to research released by the Trades Union Congress.

The number of jobs in the region has fallen by 4 per cent, from 2,719,400 in the third quarter of 2007 to 2,615,000 in the first quarter of 2010 – a loss of 104,400 jobs in total across the South West.

Analysis of Office for National Statistics figures shows employment in the South West peaked ahead of the UK as a whole – meaning the region was hit by job losses six months earlier than the rest of the country.

The analysis, carried out by the TUC, shows a million jobs have been lost across the UK as a whole, thanks to the recession.

UK employment fell by 3 per cent, from 31.78 million in the UK employment peak of the second quarter of 2008 to 30.77 million in the first quarter of 2010. The worst affected industries across the UK as a whole are mining and quarrying (-15 per cent), manufacturing (-12 per cent) and construction (-11 per cent).

The TUC analysis shows if the private sector continues to create jobs at the same rate that it has over the last 10 years, it is likely to take 14 years for UK employment levels to those before the recession struck.

In some regions, such as the North West, it will take more than two decades to make up for the jobs lost in the recession and those to come from public spending cuts. For the South West, the analysis shows it will take at least 11 years for the private sector to return job levels to pre-recession levels.

South West figures

Since the South West employment peak of Q3 2007, the worst affected industries are: construction (-24 per cent); transport & storage (-13 per cent); accommodation & food services (-11 per cent); professional/science (-11 per cent); finance and insurance (-10 per cent).

It’s not all bad news: the number of jobs in agriculture, forestry & fishing has increased by 52 per cent since Q3 2007; water supply (+35 per cent); arts and entertainment (+14 per cent); and by 6 per cent each in admin & support services, public administration and real estate.

But overall there’s been a drop of 4 per cent since the region’s employment peak of Q3 2007.

It will take at least 11 years for the private sector to create enough jobs to return employment levels in the region to pre-recession levels, based on the private sector’s growth rate of the last 10 years.

South West TUC Regional Secretary Nigel Costley said: ‘These figures show how bad the recession has hit the South West. Behind the big numbers are countless personal stories of upset and loss.

‘Valuable skills and experience have gone, good firms have suffered. But we fear worse to come given the savage nature of the cuts that are coming. For every public sector job lost there will be even more gone in the private sector.’

Other findings of the TUC analysis include:

There is a clear north-south divide in the decline in the number of jobs. Scotland, Northern Ireland, the North West and the West Midlands have had the biggest falls in employment (-4 per cent) since Q2 2008.

The South West has seen a -3 per cent fall in employment since Q2 2008 – but when the region’s employment peak of Q3 2007 is taken into account, the figures show it has suffered the same rate of job losses (-4 per cent) as the worst performing regions.

The national figures would be far worse were it not for the growth of public sector employment since 2008, particularly in education (+4 per cent) and health and social work (+6 per cent).

Source: TUC

Public Sector Job Losses in South West

The following press release from TUC South West was released in March 2012.


One in 14 public sector workers in the South West lost their jobs between July and September last year, according to new figures from the Office of National Statistics.

A total of 37,000 workers – at seven per cent, the largest fall in the country – of those employed in the region by local government, the police, the forces and the NHS lost their jobs.

Nigel Costley, Regional Secretary of the South West TUC, said: ‘All across our region public sector jobs are disappearing in droves as local councils, government agencies and the health service are forced to cut services to the core as the Chancellor’s austerity measures hit hard.

‘More than 37,000 public sector workers in the South West have now lost their jobs at a time when finding work has never been harder.

‘Behind every job loss is not just the job consequences but the loss of valuable public services.

‘Ministers must see that their economic policies are doing huge harm, and with more spending cuts coming down the track and the recovery still weak, thousands more public servants will soon be swelling the ranks of the unemployed.

‘A change of direction which has jobs and growth at its heart is now long overdue.’


This is devastating enough but when you take this together with the results of a recent Chartered Institute of Personnel and Development (CIPD) survey of 1,000 employers it gets even worse. It highlights that the governments assurances that the private sector would “fill the hole” made by all the public sector cuts is simply proving to be be pure fantasy without a growth strategy.

The survey showed that a third of private sector employers had kept on more staff than they needed to avoid losing skills.

But almost two-thirds said they would have to cut back if economic growth did not pick up in the next year.

“Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills,” said report author Gerwyn Davies.

“This is a make or break moment for employers – unless growth picks up many will find that they cannot hold on to some workers any longer.

“The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.”

The survey also showed that public sector organisations were predicting average pay rises of 0.2%, compared with 2.5% in the private sector.

Source: BBC