A new survey on wages has been drawn to my attention, issued by an organisation called Vocalink. I admit it is new to me, so comments ion its credibility are welcome, but the findings are significant:
• Private sector earnings growth, as measured by The VocaLink FTSE 350 Take Home Pay index, falls to 1.1% year-on-year in December (from 1.7% in November), its lowest level since July 2010
• Public sector earnings, as measured by The VocaLink Public Sector Index, also edges down to 1.1% annual growth in December from 1.3% in November
• Annual growth on the VocaLink manufacturing index drops to its lowest level on record at 0.4% in December from 2.0% last month
So private and public sector pay seems to be moving at the same rate, which is almost not at all, as inflation takes off, fed by shortages, or speculation, or both.
The absurd notion that we will have growth in this scenario looks more ridiculous by the day.
The reality is we will have increasing poverty, real falls in income, and declining demand for non-essentrial items, all of which suggest a counterbalance to inflation on core foodstuffs and essential items, paid for however by a reduction in well being, especially for the poorest in our communities.
This is the scenario where without doubt Bob Diamond's bonus is paid for by the poorest in the UK. And that's why action on such issues has to happen. We can do without Bob Diamond and the vast majority of what his investment banking colleagues do. But we can't live with the poorest getting poorer in our communities. It's tough enough already for them.
Hat tip: Mark Tanner
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Richard,
Glad you found the information useful From what I understand Vocalink proecess over 90% of wage and salary payments for the banks. This means, at least according to the BBC report, that they are probably the most reliable source of real wage information. A BBC report from Wake Up to Money including an interview with Vocallinks Marian King is at http://www.bbc.co.uk/news/business-12181863?utm_source=twitterfeed&utm_medium=twitter
Very interesting Richard. I’d be interested if anyone has done a comparison of ONS statistics on average earnings with Vocalink (in fact I might just do the analysis myself if I have the time)…
A major factor in wages stagnation is the reserve army of labour. Obvious.
You highlight the effects of lack of demand because of low wages but a bigger factor is lack of demand through unemployment from displacement.
There is a difference in earn/spend here, so urgently required, and wages repatriated overseas; and it is a signficant factor.
Polish academic research shows that in 2008, one third of all remittances to Poland were coming from tiny Ireland. Look at Ireland now, yet Poland is not in recession.
The structures encouraging the use of migrant labour, whereby no NI or tax is paid, with wages repatriated overseas, has to be a significant negative for the national economy, even while, at the level of the individual firm, there are obviously benefits from cheap labour.
But this essential discussion that we need to have is always silenced by chatterati, usually with secure incomes, who like to see themselves as ‘liberal’.