The Pay Up campaign focuses not on high pay but low pay as the market denies millions even the most basic standard of living
The past 30 years can be defined by two diverging pay trends. The first is common knowledge: those at the top have seen eye-watering rewards, with some companies giving pay rises to CEOs of up to 4,000% since 1979. The second is more stark, yet it has gained far less coverage in the media. In 1977, of every £100 of value generated by the UK economy, £16 went to those in the bottom half of the national pay scale. By 2010, that figure was £10 – a fall of 37%. Productivity has risen, profits have soared, but we’ve had growth without gain. Sky-high pay packets at the top and poverty wages at the bottom are undoubtedly two sides of the same coin, but the Pay Up campaign believes the latter is far more pressing an issue.
In the 30 years after the end of the second world war, inequality actually gradually decreased as the welfare state was constructed and the labour movement took home a steadily increasing share of the economic pie. Today, there is a real crisis of in-work poverty. The Joseph Rowntree Foundation puts the number of children living in “in-work” poverty at 2 million and rising. David Cameron repeats that the government is cutting welfare “so it pays to have a job” but for millions of people, work does not pay. Wages do not cover household bills, let alone provide a decent standard of living.
Instead of pay rises, we have helped pay our own wages through the £20bn of in-work tax credits spent each year. While tax credits are a lifeline to the 5 million households in the UK that rely on them, they have allowed private companies to shirk responsibility for wage bills, shifting it to the public instead and creating a subsidy for private sector profit. The problem is not tax credits and welfare, but the fact that the market is not delivering even the most basic standard of living for millions of working people.
Instead of wage rises we have been given credit cards, loans and mounting household debt to maintain a degree of purchasing power. Low pay is an unexamined factor in the current economic crisis which started in the US housing market with banks first dishing out high-interest mortgages to low-income families, and then turning that risky debt into highly profitable financial products to trade.
While we think that traditional definitions of growth and demand need re-shaping, pay rises would not only create a more stable and sustainable economy, but would also start injecting demand in a double-dip recession that is suffering from a suffocating concoction of austerity, unemployment and low pay. Capitalism’s critics have often focused on high CEO pay in isolation. Imagine, if a CEO gets a pay cut of £1m next year, what does that actually mean for the rest of us? Not much. Far less is being said about low pay which affects 20% of the UK workforce directly – entrenching poverty and axing opportunity – and the other 80% through the impact this has on social wellbeing and the economy as a whole.
A lot has been said since the collapse of Northern Rock about the greed of banks, high finance and “the 1%”. High pay and low pay are two sides of the same coin. We need to direct anger towards a more fundamental question at the heart of the economy; the relationship between labour and capital. As a start, we need a living wage across as much of the economy as possible, but long-term solutions rest in stronger unions, co-operative models of employee ownership and workplace democracy.
Pay Up wants to kickstart this public conversation. To do this we’ve selected a character – Sainsbury’s – which has seen an enormous rise in profits, booming CEO pay, but real terms pay cuts for workers on basic rates. We don’t just want Sainsbury’s chief executive Justin King to earn less next year; we want the workforce to take home a greater slice of the Sainsbury’s pie. Workers at Sainsbury’s have been demanding a living wage for over a year, and Pay Up is echoing that demand. Like many big profitable businesses, Sainsbury’s can afford to pay up.
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