Living standards crash as recession cuts deep
The living standards of British workers are being progressively destroyed, during the longest slump in the modern age as the capitalist recession takes its toll on the only people who create value in society.
Wages have decreased by a total of 6% in real terms in the last five years, as people have accepted cuts in pay or reduced hours in order to stay in a job at any cost.
On paper, average earnings increased by 1.3% in the first quarter of 2013, but this is skewed by the massive pay and bonuses of the richest. The reality is that workers’ wages are going backwards, whilst inflation is running at 2.7% per annum.
One-third of workers found their wages were frozen between 2010 and 2011, and 70% experienced real wage cuts, according to a new report from the Institute of Fiscal Studies.
It compares the situation today to the Great Depression of the 1930s, and finds that it is worse. The slump, says the IFS, has been "deeper and longer than those of the 1990s, the 1980s and even the 1930s. It has seen household incomes and spending drop more and stay lower longer."
There has been an unprecedented drop in productivity in the UK, with factories producing 10% less than they were in 2007, the year before the crash. The drop in household incomes means that the service and retail sector are poised for further bankruptcies and closures.
And it's the same picture across the world, as the World Bank today cut its forecast for growth in global GDP in 2013 from 3.1% to 3%. This is in effect negative growth because it does not cover even the needs of the increase in global population.
Few new workers are entering the world economy, and this can be seen by the massive levels of youth unemployment everywhere.
The World Bank further predicts that the eurozone economy will shrink by 0.6% this year. Growth is slowing in China and India.
The TUC today launches a new campaign "Britain needs a pay rise", but it is all empty rhetoric. A Facebook "like" is not going to put a penny in the pocket of workers, unionised or otherwise.
Last year, the TUC conference pledged an all-out fight against the prolonged freeze in public sector imposed by the ConDems. But nothing whatsoever resulted in terms of action, after the Labour leadership endorsed the government’s policy.
More important than the empty words of the suits at the TUC is the political transformation of a whole generation of young people across the globe. They are being excluded from the world economy, not only in Greece, Spain, Portugal and the UK but also in Turkey, Egypt, Syria, Tunisia and beyond.
And the fact that their response to this is to put themselves in the leadership of movements for democracy is a recognition on their part that this economic crisis – we might say this economic exclusion – can only be solved by political means.
It is governments who enforce the law that growth is the only criteria worth pursuing. They are all, universally, in every country mentioned above, fully committed to the perspective that people's capacity to work is a commodity, like any other commodity. If an individual is unable to sell it, or can only achieve a low price for it – that's just the law of the market.
This has always been the case. It is worth reminding ourselves that the transformation of Britain into a low wage economy predates the economic crash. The wages of full-time workers barely grew between 2003 and 2008 and were negative for the lowest earners, who never benefited from the Blair/Brown credit-fuelled boom.
What has changed is that all pretence that the state is concerned for the poorest and can act to alleviate the worst impacts of this market, has been removed.
Therefore it is not austerity per se we should rail against but the rule of the capitalist market and the exploitation of labour for profit, which is destroying our living standards, our economic future and our planet.
13 June 2013