I posted this thread on Twitter this morning:
There are continuing suggestions in the media that ministers are considering one-off payments to striking workers as a way to solve pay disputes. These are madness and will not address the issues working people face and must be resisted. A thread...
Only days ago Rishi Sunak was saying maths education should be extended to 18 so more people enjoyed basic numeracy in this country. However, he is now arguing pay disputes can be solved by one-off payments to strikers and that shows he does not understand the maths of inflation.
Inflation is the measure of the relative change in prices over a 12-month period. So inflation in January 2023 will be calculated by comparing prices this year with prices in January 2022. The result will be a figure of around 10%.
The reason why I know that the figure will be around 10% is that is the overall price rise that has resulted from the impact of Putin's war in Ukraine. That impact is probably never going to go away.
In January 2024, prices will be compared with prices in January 2023. There is (we hope) not going to be another war this year. In addition, we know that prices of oil, gas, wheat and other raw materials are no longer rising around the world. They have settled at their new level.
So in January 2024 it is very likely that inflation will be very much lower than it is now. That is good news. Price increases will be coming to an end by January 2024, and may even stop rising altogether in 2024.
But that does not mean that prices will fall. All that it means is that increases will have stopped, because it is price increases that inflation measures. Actual prices will still be 10% higher in January 2024 than they were in January 2022, even if inflation has gone away.
What has this to do with one-off, lump-sum pay settlements that ministers want? What they are hoping is that people will not understand this. Their hope is that people will think that if inflation is falling they will think prices are falling and so accept a one-off pay deal.
But whilst one-off pay deals might solve current problems people face (if they're big enough) they will do nothing to solve the cost of living crisis that will then re-emerge in 2024 as people face prices that are still high with no pay increase to deal with them.
And what ministers then hope is that because inflation will then be low they will have public support for saying that no one should get a pay rise anymore, meaning that they will have succeeded (if they win that argument) in imposing the real pay cuts they have wanted all along.
In other words, these one-off pay deals that they want to offer are a deliberate ruse, con trick or straightforward fraud to impose real cuts that people simply cannot afford. They are part of this government's full-on economic civil war with the people of this country.
In that case please do not think that any offer of this sort that any minister or employer makes is in any way generous, or a serious attempt to solve a pay dispute. People need permanent pay rises now to tackle the permanent price rises that have taken place in our economy.
Anything less than a full, inflation-matching pay rise for working people in this country is at this moment an abuse of this who work, undertaken with the two fold objective of making employers richer and cutting the national debt, wholly unnecessarily.
So why are ministers talking about these deals? It's because either a) they're stupid, or b) they think people are stupid or c) both of these reasons. And for those who like to know the answer to multiple-choice questions, I think the right answer is (a).
One-off pay deals have to be rejected in that case. They have no part to play in the current cost-of-living crisis that the UK is facing, which can only be solved by the government paying what people are worth for their work, which is, at a minimum, an inflation-matching deal.
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“People need permanent pay rises now to tackle the permanent pay rises that have taken place in our economy.”
Did you mean the second “pay” in that sentence to be “price”?
Corrected
Thanks
I think the correct response to this proposal is…
Q: OK, so explain to me why you think we will deserve a pay cut in 2024?
Answer A: You won’t get a pay cut in 2024….. (in which case why not make this a regular one-off payment and lets call it (say) PAY.)
Answer B: Because you are all lazy layabouts… (which won’t go down very well).
A better solution would be to award an interim pay rise for this year pitched at a level that will just squeak through a re-ballot of members. 8%??…. with a promise to abide by a genuinely independent pay review next year. This might allow all sides a way out of this dispute (for now).
Maybe
But I am not wholly convinced
I am not convinced either…. indeed, what is needed is a full and fair pay award NOW for all public sector workers.
What I was suggesting was a strategy for the government that might just get them out of the hole they have dug.
The ‘independent’ pay review bodies receive, at the beginning of their deliberations, notification of the budget that the government has set for the year they are considering. So thier starting point is to cap the rise at that level.
I have no problem with a one off payment to cover the price rises that have taken place this year already, as long as it is linked to a rise that sets the 2024 base pay level 15% higher than the 2023 level, saving face by not reopening the current year, while ensuring a proper pay rise moving forward.
“People need permanent pay rises now to tackle the permanent pay rises that have taken place in our economy.”
Second “pay rises” should be “price rises”
Corrected – thank yu
He doesn’t understand the maths does he?
He doesn’t understand that inflation raises the base, and unless there is deflation, raises it permanently.
A one off lump sum payment is like offering a hill walker a mini trampoline to scale a huge vertical cliff they’ve arrived at, whereas a genuine base pay rise is a staircase cut into the rock. Only one of those options gets you to scale the hurdle sustainably to move forward.
No surprise the Tories are temped to only offer the mini trampoline. A party that cannot bear to see people given needed help, especially financial help.
*Sorry for the clumsy analogy.
I like it
I think he does understand the maths. He just hopes that most people don’t. His pledges include to halve inflation “To ease the cost of living and give people financial security.” Halving inflation has no effect on the cost of living, except to increase it by less.
Even if (but unlikely) the government were to concede just an inflation rate of pay increase for the 2022/3 pay round, this will still not satisfy the nurses, teachers, and others who have suffered continued below-inflation settlements for every year since 2010 which means only rises in the 20% region would be enough to say that austerity was now finished and satisfactory industrial relations are returned to “normal”.
Agreed
It’s not just maths or arithmetic – it’s more fundamental: the scientific method is absent from debate.
For example the nostrum that ‘private ownership is better than state ownership’ is occasionally appropriate but has been shown to be false in many circumstances. Abundant evidence negates it as a sound principal.
Politicians and others use the discredited method of ‘argument by repeated assertion’ to maintain such policies and propose new ones – most of which are unlikely to be successful.
The principle should be that policies should always be supported by evidence – preferably tested by scientific methods.
Another nostrum is that ‘economic growth is good even for the world’s wealthiest countries’. The evidence is overwhelming that this policy is accelerating climate change, destroying species and, unless renounced soon, will ensure ‘the end of civilisation as we know it’. (David Attenborough at the UN in 2019 and increasing numbers of others.)
Turning to Levelling Up, we have had the glib Rishi Sunak as smooth-salesman-technician explaining a really tawdry outcome as a raging success,; because, he instructs lesser mortals with unconvincing schoolmasterly authority; you need to look at it on a per capita basis. So lets look at the per capita. The Manchester Evening News has usefully mapped it. South East England £22.80p per capita. Yorkshire and Humber, £21.90p per capita. Work that one out as Levelling UP. Yorkshire is receiving 90p per person less than the South East. Yorkshire is Levelling Up Surrey; down-at-heel Gove territory.
London alone receives £16.7 per capita. North West England, £48.20p per capita. Now that is a big difference, but hold on to your hat. This is why ‘per capit’a is the Big Conservative Sell. It distorts the real picture. The North East has well below 20% of the London population. The total North East funding is £100.8m; London, £200m, £100m more! Now please tell me; how much real difference will be made to the North East levelling up (moving to a significantly more equal footing) with £100m less funding than London?
The comparisons are belittling and comically absurd. £2Bn nationally does virtually nothing to achive real changes in income levels or economic activity or quality of life; and the richest areas are taking a substantial segment of the total.
Sunak chose per capita to confuse and distort a really fake message. That really is pretty low.
Let us be clear. In Britain’s distorted North-South economy, £2Bn is peanuts. The Conservatives blow 15 times that kind of money in just over 15 minutes – on nothing at all – in just one of their weekly revolving door Premierships of junk adminstrations.
It was a few years ago but in terms of total state investment in capital expenditure then it was £2000 per capita in London and £20 per capita in Newcastle.
This doesn’t change anything. Most investment in the UK, including Government investment goes to London and the south. HS2 provides an example. Around half the total UK cost of HS2 for the whole UK will be spent simply to take it out of London (underground and hugely expensive to satisfy the nimbies). This half is also spent first. When HS2 is cancelled the money spent will be in and for London/South East. Crossrail cost £18.8Bn. Crossrail2 will cost £31Bn, and counting. All of that – exclusively for London/South East. Infrastructure creates growth (including vast free profits for property owners, whereever they stick a station).
The rest of the UK never, ever sees this kind of investment. It is spent in London/South East not because what London produces justifies it; but because the concentration of effort and investment creates the growth in London and the South East. The mess we are in; the skewed, distorted, chaotic environment is not an accident.
We would be better, cheaper and quicker to start investments like HS2 in the north and connect out, north and south, from there. The cheapest solution would be to connect up to the Channel tunnel and miss London altogether. Then Glasgow, Edinburgh, Newcastle and Manchester could connect fast to the whole of Europe. I am joking? It isn’t as big a joke as the mess we are in.
It’s actually even worse than any of you think.
This is a typical ‘Goldman Sachs’ approach – don’t you get it?
It’s to offer more money up front in order that the problem (scruples, loyalties, principles) can be made/paid to go away to get a deal and we’ll worry about all those other things later.
It really is as simple and short term as that I promise you.
If the government is able to dress up an additional backdated pay increase for 2022-23 as a one-off payment so be it. Cash is cash and I am sure it would be welcome. A number of private sector businesses have been making “cost of living” bonus payments of this sort, as a temporary stop-gap measure.
But that means that either pay will need to increase even more for 2023-24 or there will be a need for another lump sum. Prices are not falling.
The damage that this sort of dispute makes to morale (the goodwill that make the thing actually work), and to recruitment and retention, will take years to fix.