{"id":36433,"date":"2017-07-12T17:35:57","date_gmt":"2017-07-12T07:35:57","guid":{"rendered":"https:\/\/billmitchell.org\/blog\/?p=36433"},"modified":"2017-07-12T17:35:57","modified_gmt":"2017-07-12T07:35:57","slug":"disturbing-pay-trends-in-britain","status":"publish","type":"post","link":"https:\/\/billmitchell.org\/blog\/?p=36433","title":{"rendered":"Disturbing pay trends in Britain"},"content":{"rendered":"

\t\t\t\tEarlier this month (July 3, 2017) the British Office of National Statistics (ONS) released a research report – Wage growth in Pay Review Body Occupations<\/a> – which basically summarises what has gone wrong with the world under neo-liberalism. While the Report is about the UK, which has particular characteristics, the trends identified are almost universal and reflect the dominance of the ‘free-(not!)-market’ austerity mentality that has crippled progress around the world. It also helps us understand why the British economy is stalling again and why the latest data on household spending is so disturbing. These trends have nothing to do with Brexit. They are all down to misguided government policy (austerity) and erroneous strategies that seek to generate fiscal surpluses when the non-government sector needs to also run surpluses (and the two aspirations are not simultaneously achievable). British workers are paying for this incompetence. The economists who gratuitously hand out the spurious advice, unfortunately do not lose their jobs.
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Workers in some public sector occupations are identified as being Key Workers<\/a> because they are “considered to provide an essential service” and without their efforts society would cease to function as we know it.<\/p>\n

They include health services staff, teachers, police officers, social workers and related therapists, firefighters, traffic officers etc.<\/p>\n

If these workers are not doing their jobs properly then things go pear-shaped fairly quickly.<\/p>\n

The concept is often used to describe disparate urban developments where the top-end-of-town (the rich) gentrify previous working class neighbourhoods and drive up real estate prices, which force the workers, including the ‘key workers’ out onto the fringes of the urban setlement.<\/p>\n

Their commutes become longer and eat up more of their (usually) low incomes.<\/p>\n

A progressive agenda must include housing provision for lower-paid key workers in areas where they are required to work to fulfill their essential roles to society. But that is another topic altogether.<\/p>\n

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But a progressive agenda also has to aim to rebalance the wage distribution in favour of ‘key workers’ and ensure that unproductive workers – that is, those that work in financial markets, as an example – are rewarded more modestly, as is fitting for their contribution to society.<\/p>\n

Well that is not the way things are working out in the UK.<\/p>\n

Before we consider the very disturbing ONS Report (cited above) consider the recent trends.<\/p>\n

The ONS data – Quarterly sector accounts: Jan to Mar 2017<\/a> – (released June 30, 2017) showed that British households were rapidly reducing their saving rate out of disposable income.<\/p>\n

And – Real households disposable income (RHDI) fell by 1.4% in Quarter 1 2017.<\/p>\n

And – Net borrowing for central government was \u00a34.6 billion in Quarter 1 2017, the lowest since Quarter 1 2002.”<\/p>\n

And – The fall in the saving ratio and the reduction of the central government’s net borrowing was due mainly to increases on taxes on income and wealth.<\/p>\n

All causally linked from the fiscal policy drag (austerity) to damage to the non-government sector’s well-being in discretionary terms.<\/p>\n

Please see my blog – Something is rotten in the state of … Britain<\/a> – for more discussion.<\/p>\n

Then I read the report – June rounds off worst quarter for spending since Q3 2013<\/a>– which shows that:<\/p>\n

\nHousehold expenditure declines on an annual basis for second month running (-0.3%) … Spending falls by -0.3% year-on-year on average over Q2, lowest quarterly figure since Q3 2013.\n<\/p><\/blockquote>\n

The following graph showing the evolution of the ‘Visa UK Spending Index’ (and reproduced from the Report) doesn’t augur well.<\/p>\n

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The reason for the sharp decline in consumer spending?<\/p>\n

The company that produces the index commented:<\/p>\n

\nJune data provides further evidence that an increase in the cost of living, coupled with slowing wage growth, are beginning to squeeze household disposable income. Consumer spending fell for the second month in a row, rounding off the worst quarter since Q3 2013.\n<\/p><\/blockquote>\n

If real wages are in decline or stagnant then households will cut spending and\/or maintain spending via increased debt. In this neo-liberal era it is usually the latter strategy that is used first (running up credit cards etc) then when that becomes precarious or they run out of credit – then the spending collapses.<\/p>\n

That is more or less where we are at now in the UK (and as I noted above – the trend is not confined to the UK – so Brexit cannot be blamed).<\/p>\n

So where do key workers come into this?<\/p>\n

Simple. As noted in the Introduction, ONS released a commissioned study into pay trends in several occupations that come under the purview of the British Pay Review Body (PRB).<\/p>\n

The study for the Office of Manpower Economics<\/a> (don’t you just love the way the British bureaucrasy has kept up with the social trends and worked out that women also work!):<\/p>\n

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