Britain’s workers: falling further and further behind

IN BRITAIN over the last 30 years, the higher up the income scale you are, the faster your living standards rise. And the super-rich have not had it so good for 100 years. That does not seem too remarkable. It is, after all, what working-class people know from daily experience. A TUC pamphlet by Stewart Lansley, however, provides the stats to back that up, albeit while offering little in the way of a programme to combat it.

The share of gross domestic product (GDP) going to wages was 58-60% until the early 1970s, rising to a high of 64.5% in 1975, the end of the post-second world war economic boom. Then it started to drop steadily, hitting a post-war low of 51.7% in 1996. It crawled up to 55.2% in 2001 before slipping back to 53.2% in 2008.

Reflecting general economic trends, after each recession since 1979, the proportion of GDP going to wages has fallen further. One consequence has been that household debt has risen from 45% of income in 1980 to 91.1% in 1997 and 157.4% in 2007. Productivity, however, continued growing – by 1.9% a year since 1980. Over the same time, real wages rose by 1.6%. Since 2000, productivity growth averaged 1.6%, real wages a mere 0.9%.

Since taking office in 1997, New Labour has increased state spending on benefits and tax credits for lower-income families, etc. At 2006/07 prices, this went up from £18.3 billion a year in 1997 to £30.6 billion ten years later. In reality, however, this represents a massive state subsidy to big business, and has not prevented increased wage inequality. Real weekly earnings for the richest 10% have doubled since 1978, average wages rose by nearly 60%, but the poorest 10% saw theirs rise by just over 20%.

This data is derived by adjusting headline growth in average occupational pay against inflation, the rise in the retail price index excluding mortgage payments – RPI(X). However, people on lower incomes spend a higher proportion of their income on utility bills and staple food items. These were some of the fastest-rising prices immediately before the recession, so the situation facing the poorest people is much worse than the average suggests.

Incomes have soared for the top 0.1% – financiers, bankers and company executives – whose remuneration packages rose nine times faster than those of the median earner. Corporate lawyers, accountants, senior civil servants and top local government officials have also done well.

The changing nature of employment has been a big factor, with the decimation of skilled and semi-skilled work – in industries which traditionally had stronger trade union organisation. The number of manufacturing jobs fell from 7.13m in 1978 to 3.15m in 2008, while those in finance and business services rose from 2.79m to 6.67m.

As income decreases, the unemployment rate rises higher and more rapidly. Among unskilled and semi-skilled workers, there is a 13.7% unemployment rate, compared with 1.3% for professionals. Among the middle fifth of the population, 6% are unemployed, with 9% in the lowest fifth, but only 1.53% of the wealthiest. These figures do not include the long-term unemployed, currently 22% of the bottom fifth.

There is also a link to educational attainment. Before the recession, people with no qualifications were four times more likely to be unemployed than graduates, those with GCSEs three times, and those with A-levels twice as likely to be out of work.

This information needs to be turned into a programme which can be taken up by the organised working class – in the first instance, to begin to redress the balance. The TUC pamphlet does not do this. Lansley presents a model based on workers’ share of GDP going to wages being held at 55.2% (the 2001 figure) through to 2013. This would see GDP growing by 0.1% a year – 1.5% in total. This is way below the wage share of GDP at the height of the post-war boom – won by organised workers taking action to improve pay and conditions, against the backdrop of an expanding capitalist system where the ruling class granted some concessions in return for relative social peace.

In today’s climate of savage cuts, working-class people face a bitter struggle just to hold on to what we have. The nationalisation of key sectors of the economy under workers’ democratic control, expanding all public services, providing jobs and education for youth, and other radical measures are needed – all far from the thoughts of the TUC leaders. Such an action programme would be a first step. Guaranteeing a decent future for working-class people would require deeper systemic change: a socialist transformation of society.

Hugh Caffrey

Unfair to Middling: how middle income Britain’s shrinking wage fuelled the crash and threatens recovery, by Stewart Lansley, 2009. Click for online pdf