Shocking wage growth shows pain is shared by working and workless poor

Mon, 04/01/2016 - 13:25 -- nick

New research by the Labour Party shows that wage growth will be lower in the Tory decade than at any time since the 1920s.

House of Commons research took the Office for Budget Responsibility's estimate that pay would only grow by 6.2% between 2010 and 2020 as its starting point, showing the last time it was worse was between 1920-30.

By contrast, 2000-10 saw growth twice as high even when inflation was taken into account, and even though the financial crash took place then.

Labour work and pensions spokesman Owen Smith commissioned the research, and said:

“Even with this year’s increase in the minimum wage, the Tories will have overseen the slowest pay growth in a century and the third slowest since the 1860s.”

The crisis in incomes is particularly felt among the poorest in the country, with those who have marketable skills seeing pay rises and competition for their labour that the low-skilled don't.

Too many are stuck in a cycle of 'low pay/no pay', the last to be employed when the economy is growing and the first to be laid off when it shrinks. The growth in temporary work and self-employment, and increase in zero-hour contracts, means many do not even receive redundancy payments when this happens.

Investment in training and education is key to improving prosperity for both individuals and the country, but following an 11% cut in the adult skills budget this year George Osborne has announced another 4% cut starting in April 2016.

Wage growth is even more vital since the Conservative government decided to cut benefits for those in work. Despite appearing to reverse its tax credit cuts it has confirmed they will be enacted for Universal Credit claimants, meaning those who were entitled will see their incomes reduce when they move across to the new system.

The Institute for Fiscal Studies points out that 2.6 million families will see an average £1,600 cut due to these changes, yet the government have been lining up to deny anyone would be worse off.

It is clear that those who are already struggling to make ends meet will see little respite this year.