This chart has been published by the Office for National Statistics this morning:
There are three things to note.
First, wages are at record levels.
Second, the rate of increase has grown.
Third, and most importantly, wage growth has finally moved into net positive territory. In other words, overall, people are beginning to see wage recovery that matches inflation.
Not everyone will have enjoyed that positive wage growth, of course. But, overall, it is being seen.
The Bank of England will have broken out in a cold sweat at the idea of this. The Treasury will be worried. Both will claim that the world is about to end because people who have to work for a living might now have the means to sustain their spending power. Both will ignore the fact that without this happening, economic recovery is impossible. Instead, they will fret about the fact that profits might be eroded. But I am delighted: this had to happen.
What also has to happen is that it keeps on happening. It's not enough for wage increases to turn positive. They now have to continue at above inflation rates for a while so that the losses people suffered in the last year or so are recovered.
I can't see any major politician getting close to understanding that simple fact - for fact, it is. Instead, they will all be shouting about the unaffordability of wage rises without revealing that they have the slightest understanding of the fact that in the macroeconomy, one person's wage rise is the source of another person's income.
There are wage disputes to come, in other words.
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This is off-thread. BBC Radio Scotland News (GMS) had an interview this morning with the CEO of a local bus company in Glasgow which, when faced with another operator cutting late-night services, to the consternation hospitality industry, stepped in to offer partial reinstatement, through working “in partnership” with its competitor. The CEO, Ralph Roberts discussed the advantages of ‘partnership’, and the barriers to partnership serving citizens because of the pressures of “competition” preventing dialogue; providing us with a small insight into the endemic problem of neoliberalism. Competition can be important, but it is much less central to the functioning of a successful economy than neoliberalism claims; and is often a hindrance to the provision of vital goods and services. Indeed ‘competition’ is as often as much a hindrance to economic growth and development than it is a creator of growth. In the urban hospitality industry, late-night public transport is critical for both employees and consumers. The pressures of pure competition cannot produce a profitable return for these businesses; but the withdrawal of the services merely compounds the adverse affects on the hospitality industry by the withdrawal of services. Competition often does not work; it is damaging.
The underlying problem is the fallacy of neoliberalism. Neoliberalism is a fallacy, whenever it isn’t a paradox.
Agreed
You, John Warren and others use ‘growth’ as an indication of ‘good’.
I don’t think you should because ‘growth’ – with few exceptions – means ‘growth of carbon dioxide emissions’.
A headline in today’s Guardian: “Even in Greek towns razed by wildfires, people don’t blame the climate crisis. That must change”
https://www.theguardian.com/commentisfree/2023/aug/14/greece-wildfires-climate-crisis-future
Might the following help?
At the North and South Poles, on Greenland and on mountain glaciers, ice is now hugely – terrifyingly – reduced.
We are in deep, deep trouble!
A bit about the development of science:
For length: Scientists defined *one metre* as the distance between two scratches on a length of metal in a Paris vault++.
One hundredth of that they called *one centimetre*.
For weight: one cubic centimetre of water, was called *one gram*++
For temperature: *the centigrade scale*: they said call the temperature at which ice melts 0ºC and at which it boils 100ºC.
For heat (or energy): A *calorie* is the energy needed to raise the temperature of 1 gram of water by 1°C ++
*Latent Heat*: Experiment shows that to melt ice requires *80 calories for each gram of ice*.
When 80 calories of *the sun’s heat* have melted a gram of ice, the *surrounding temperature remains the same* (0°C) so there will be *less ice* but, so long as there is *some* ice, the temperature will not change.
But the next 80 calories will either melt more ice *or raise the temperature of the surrounding water a lot* and *that ‘lot’ has only just got started*.
Another important factor: *white ice or snow reflects 80% to 90% of the sun’s heat. Dark surfaces absorb around 80% of the sun’s heat that shines on them*.
Soot – incompletely burned coal, gas, motor, ship or aircraft fuel – from power stations, industry and home heating – soot has been colouring the snow and ice. This is *trouble*.
It gets covered by snow in winter, so the spring melt is not so bad – but when last year’s soot (plus accumulated soot from the last 150 years) is revealed – and then there is more soot from the current year. *Big trouble!*
What must be done?
Humanity is losing the climate war – and losing badly.
Is it possible for the UK to form a coalition government as Churchill did when, in May 1940, Britain was losing WW2?
Lord Deben, Caroline Lucas, Ed Milliband to start with – and with a suitable role for Richard Murphy from Day One!
Flying, motoring, electricity, gas, water need to be restricted if not rationed on the basis of ‘same for everyone’ as with the war-time government.
Critics – deceivers – both the written and spoken word to be restricted – as then.
In 1940, there were about 1 million unemployed. (Jobs guarantee?)
The world needs big changes – urgently.
And Churchill said we will act alone as long as we need to.
Also ‘I promise nothing – nothing but blood, toil, tears and sweat.’
++[For enthusiasts: based on these early decisions, length and weight (mass) are now defined very accurately another way and 1 calorie is defined as 4.1868 joules]
Thanks and noted
Mr Burlington,
You assume I understand nothing about the points you make. You also assume what I mean by growth. Any change from fossil fuels to green technology requires growth in the new economy. The hospitality industry was badly hit in city centres in the UK with business closures; recovery of hospitality (people/service centred businesses) requires new growth for cities, serving a differently focused green future. It can’t be built out of wholesale, across the board economic decline.
I find it bizarre that you try to score a point when I am writing about innovation in public transport; and if you had bothered to be as rigorous in your critique of me, as you are to declaim your scientific credentials, you may have noted that Robert’s bus company (McGill’s) has a ‘green’ advantage over its competitors. In 2021 it made investments to make it an efficient low-emissions operator: Zenobe fully electrified McGill’s depots in Johnstone, Inchinnan and at Xplore, Dundee. It was followed by the delivery of 68 electric vehicles requiring a £32.5million investment partly funded by the Scottish Government’s Scottish Ultra Low Emissions Bus Scheme.
If we are actually going to make any progress in anything we really need to rise above crude knee-jerk rhetorical flourishes, in order to prove ….. nothing at all.
My apologies for the rough treatment; but really?
Richard, what in your assessment, are the factors, that are causing these wage increases?
My guess is that industrial action has played its part, but also the recruitment crisis across all sectors of the economy is forcing employers to increase wages in order to recruit and retain skilled staff.
My guess is as good as yours
What I strongky suspect is that the data is skewed by rises for the highest paid
Leave supporters at the moment are trumpeting that wage increases – which they say are a result of a labour shortage – are a clear vindication of Brexit.
So they have not noticed that real wage increases since Brexit have been negative?
Am I right in thinking that:
1. Just because wages are rising, their value is not. Although I may be paid more today than 10 years ago, I can buy less because inflation has been greater.
2. Wage increases may not be equal across all the board. Since 2010, MPs have had a 30% increase in their wages, whereas most other public sector workers have seen their wages fall in comparison. And I bet that those at the top of their game have seen huge pay rises, whereas, for example, nurses have not
You are right
This is merely catching up
I’ve frequently had to explain wages vs purchasing power to people in terms of £10 notes and physical items. If you can buy 10 items for £10 one week, and only 7 items the next week, that bit of paper has become worth less. (I realise this is a Noddy’s Guide, but….).
It’s a cop out for the Government to say that they are spending more on, say, the NHS than any other Government in the history of the Universe ever. “£10 million”, eg, is just a collection of keyboard characters – it doesn’t actually mean anything.
When I asked my Tory MP what these record amounts were producing in terms of outcomes, he simply repeated the same mantra “We’re spending more…”. I then asked him how much of the 13 years of underspend the “record amounts” were making up. He walked away from me.
I will chip again and say that some employers see the wisdom in wage rises and offer them or just (as in my case) make it happen in order attract or retain staff. I did not ask for a raise – I just got it – belatedly.
The wages rises are not huge, but they’re helpful and better than nothing.
Speaking for all the public sector though, my view is that wage suppression has been done by the Tories because they hate the sector and want it to fail – whether housing, the NHS, social services.
I tell you, the private sector has picked up many a well trained workers from the public sector as a result – and the fuckwit Tories will never admit that the public sector has actually propped up the private sector, truth be told.
That transfer of value is enormous
I think the Median value is more important than Average, as I suspect higher wage earners are getting higher wage rises at the expense of the lower skilled, thereby pushing the average up to their detriment. The Median will show if the rise is across the board or not. It will also show the disparity between high and low
I’ve always wondered why Median isn’t used in official reports as Average is more easily distorted by extreme values eg if 99 people earn £1 and only 1 earns £1000 then the average is £10.99 !
I suspect you are right
And the ONS do produce median data
Dennis:
The ONS data used in the above appear, from the Glossary at Section 5 on the page from where the above graph is captured, to be based on HMRC reports of median pay.
But the full details would be best explored by yourself.
And how is going the BoE respond to this upseting news? Apparently the BoE is under pressure to raise the interest rates as a response in the icrease of wages.
Under pressure? From who?
https://www.theguardian.com/business/2023/aug/15/bank-of-england-under-pressure-to-raise-interest-rates-after-record-jump-in-basic-pay
This wage data is going to be grist to the mill for the staff at the BoE working for the greedy rich who as Phillip Inman recently sort of pointed out would rather slit their throats than investigate profit gouging’s effect on inflation:-
“Biased Bank of England blames pay for inflation, never profit”
https://www.theguardian.com/business/2023/aug/12/biased-bank-of-england-blames-pay-for-inflation-never-profit
Who’s still for a Gordon Brown independent BoE? Bloody Labour again! Utterly useless!
I am utterly confused. Wages are at the same real level as in 2008. The public sector has had crappy wage cuts for years. The junior doctors pay is 26% below where it should be. Living standards have fallen at a rate never seen before. Yet it is claimed wages have risen into positive territory. Tell me how this can be , It is contradictory.
Some wages have risen so that in one month there was a net overall riuse in wages compared to inflation. That was it.
The public sector is not matching these wage rises. The workers who have wage leverage will prosper. Meanwhile the public sector will whither – compromising our ability to function as a so called advanced economy. In parts of the public sector such as the NHS the govts deliberate control of wage growth reinforces the march to privatisation and the prize of access to health services by the private sector. There is already a vacancy level of over 150,000 in the NHS. As everyone knows if ordinary people end up having to take up private health provision it will be unaffordable to most. The govts chums in the private health sector are circling as never before.
The hard Right are using this report to trumpet success. The claim the economic situation is improving. The BBC is accused this morning of lying about improvement by Owen Jones on YouTube. Others are agreeing. The headline is misleading and is giving our lying ministers and their media propagandists ammunition.
I notice that Sunak has said today that he will keep the triple lock for pensioners.
That probably means there will be an election early next year.
He seems to think that we have forgotten that he was chancellor when he reduced it to the double lock two years ago and we only got 3.1% in April last year.