Widespread wage freezes could threaten recovery
16/2/2010
Widespread wage freezes across the private and public sector will reduce consumer demand and could threaten the UK's fragile economic recovery, the TUC warns ahead of its third annual pay bargaining conference in London today.
To coincide with the conference, jointly hosted with Incomes Data Services (IDS), the TUC has busted ten common myths about wages in the recession.
The TUC, which URTU is an affiliated member, says that reports of widespread pay freezes, a fall in private sector wages and soar away public sector pay have all been greatly exaggerated.
Unions have negotiated wage freezes and cuts in struggling firms as a genuine alternative to job losses during the recession, but the vast majority of companies agreed decent pay rises. IDS research shows that the average pay settlement in 2009 was 2.3 per cent, even though inflation was below zero for much of the year.
The TUC rejects the myth put forward by employer groups that raising the National Minimum Wage (NMW) for young people will make it harder for them to get jobs, saying instead that it is a combination of lack of experience and lack of vacancies for new entrants that are making it harder for young people to compete for jobs. The TUC also says that young workers' employment has fared better in low paying sectors than the rest of the labour market.
Speakers at the conference - including TUC Deputy General Secretary Frances O' Grady - will say that across the board public sector pay freezes and an arbitrary freeze in the minimum wage are unjustified, and that hitting ordinary people's pay packets will reduce consumer demand which is vital for economic growth.
Frances O' Grady will say: "The UK's deep recession and low inflation have inevitably pushed wage settlements down. Unions have sensibly accepted pay freezes where it genuinely helps to keep people in work. But union negotiators are wise to employers exaggerating the need for pay restraint just so they can boost profits.
"There is a determined attack on the public sector from a politically motivated fringe that want to shrink the state. Not surprisingly they want private sector employees to think the entire public sector is paved with gold.
"But public and private sector pay are rarely linked. In the boom years the public sector fell behind the private sector, while two year deals in much of the public sector has allowed public staff to catch up a little.
"With inflation rising, it is only right that both private and public sector staff should look to pay increases in the year ahead. If staff are not paid properly then companies will have no-one to buy their goods and services."
