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Editorial: The fight for decent wages breaking out will affect the economy itself

LOCAL GOVERNMENT workers are demanding a 10 per cent pay increase. They have been offered 1.75 per cent. 

Nurses, who have borne the brunt of Covid-19, are being offered 3 per cent.

Workers in construction have been offered between 1.5 per cent and 2.5 per cent. Workers in the privatised Bristol Water have been denied any rise.

This is at a time when the consumer price index (CPI), which excludes housing costs, is running at 2.5 per cent.

Yet housing costs have been rising fast — at over 6 per cent over the past year — and most low-paid public-sector workers will be renting accommodation or paying off heavy mortgages.

The retail price index (RPI), which includes them, was already running at 4 per cent in June.

Most projections see CPI reaching 4 per cent by the end of the year and the RPI near 6 per cent.

Public-sector workers are therefore being asked to take a significant pay cut — with some of the highest cuts among those on the front line who kept essential services running through the pandemic.

Rightly, local government unions, Unison, GMB and Unite, are balloting for strike action — and so is the Royal College of Nursing.

In privatised services, still worse has been attempted. British Gas sought to enforce a fire-and-rehire strategy to cut staffing and wage costs.

BT tried the same — attempting to sack 13,000 and cut wages and conditions. In both cases a firm trade union response, by the GMB and CWU respectively, has compelled a rethink.

However, among the millions of workers in the largely non-unionised service sector, such organised responses are much rarer — with part-time and casual workers, women particularly, at risk. As the furlough ends and benefits are cut back, real hardship looms.

This is why the issue of wages and unionisation must become a central one for the labour movement — and more widely.

Remember, inflation does not derive from wages. The 6 per cent increase in housing costs has nothing to do with labour costs. Landlords are exploiting a government-created housing shortage.

Globally, the main drivers of inflation are the giant companies that control international supply chains of oil, gas and minerals. They are also those, like Amazon, that have used the pandemic to exert market control.

Between the first quarter of 2020 and the first quarter of 2021 Amazon’s profits have trebled. For 2021 the company’s global income is predicted to reach over £25 billion. The same goes for most of the big tech companies.

It’s monopoly control that drives inflation. And the money lost goes into the pockets of those who own the monopolies and investment banks.

The two years of the pandemic have seen a massive surge in their wealth. Last year the “ultra high wealth group,” owning more than $30 million, saw their wealth grow by 24 per cent.

This is why the current fight on wages is not just a matter for those directly concerned. It is also affects the whole economy — the level of demand for goods, the scale of investment and levels of employment.

It will be the struggle on wages that will determine how much internal demand is maintained and how many jobs are preserved.

The wealth extracted via monopoly control will only come back into the economy if those working in Amazon — or the privatised utilities like BT and British Gas — win it back.

Equally with the public sector: the Chancellor has declared a corporation tax holiday for two years but intends to cut back public expenditure from this autumn.

His prime concern is with the value of sterling and the ability of the City’s externally controlled banks to raise even more money for mergers and acquisitions and still more monopolisation. This is why the wages struggle is important for us all.

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