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It still isn’t wage rises fuelling inflation

It still isn’t wage rises fuelling inflation

With the latest Office For National Statistics report on pay having been released, the media is doing its usual job of trying to convince us to “show restraint” on pay claims – it’s a scam.

Front and centre on the Financial Times, Times, Guardian, et al today are misleading propaganda pieces, once again suggesting that wage rises are fuelling inflation. There’s talk of “concerns” at the Bank of England which will prompt more interest rate rises, hammering anyone who happens to be in debt (so most people).

As a typical example, the FT notes “private sector pay rose 8.2% in June,” while pay more generally rose 7.8%, and disapprovingly namechecks the 5% NHS pay deal as a contributing factor in public sector rises of 6.2% (their one-off bonus inflates the headline figure because it is bizarrely also counted in ONS stats). But the paper offsets talk about finance and business services in an odd piece which downplays the fact that the sector got by far the largest bump, with a 9.4% rise. A number doubtless skewed between lower amounts at the bottom and stonking sums at the top.

Presumably, it doesn’t pay to highlight the bankers’ collective entitlements.

For comparison to what was going on in inflation over that period, RPI Inflation as of June was 10.7%. CPI (which excludes housing costs because, apparently, those don’t count) was 7.9% Making this the only month in the last year where average pay increases have come close to matching CPI while still being far below RPI. And you’re still bang out of luck in the public sector.

But wait, there’s more! Because if you dig into the figures, pay stats for non-white collar jobs hove into view.

Construction: 5.8%
Retail: 6.3%

In both cases, people are continuing to take significant real-term wage cuts. Are those numbers nevertheless “reinforcing policymakers’ concerns over the pressures fuelling inflation,” as the FT says? If so, they shouldn’t be – if you’re not even keeping level with inflation, you cannot be its cause.

Meanwhile, in a very oddly-pitched piece on its business liveblog, the Graun is cooing over a slowing of UK grocery inflation. Good news, everyone, it’s down from 14.9% to 12.7%, and milk prices are down very slightly! So for the eagle-eyed among you, that’s retail workers getting 6.3%, while the price of what many of them are selling rises by 12.7%. But it’s a lack of wage restraint that is supposedly the problem.

The reality here is that inflation continues to be driven by rank corporate profiteering amid global crisis, and the financial sector is the main engine of these headline stats on “rising” wages. Take that out, and wages aren’t keeping pace. For people in precarious jobs, the spiral is still currently downwards.

~ Cudd

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