Guest Blog Post: Richard Lynch on the widening gap between pay and inflation

The gap between pay increases and inflation is continuing to widen, according to figures from the pay research organisations and the Office for National Statistics (ONS). The figures for median increases during the three months to end October 2011 (with end September figures in brackets) show the following:

Income Data Services (IDS)-2.3% (2.4%)

Labour Research Department (LRD)-2.5% (2.5%)

XpertHR (formerly IRS)-2.0% (2.0%)

ONS figures for increases in the three months to end September 2011 (with end August figures in brackets) show:

Average total pay (including bonuses)-2.3% (2.8%)

Average regular pay (excluding bonuses)-1.7% (1.8%)

However, the ONS figures for the three months to end October (which are published later than the figures from the pay research organisations) show increases in average total pay falling to 2.0% and increases in average regular pay rising marginally to 1.8%.

None of the above figures go even halfway to matching October’s RPI increase of 5.4% and an average of all the figures shows that pay increases are running at less than 40% of price increases. This means that ‘real pay’ is falling for most people, and falling particularly badly for public sector workers and others experiencing pay freezes at present.

According to XpertHR, pay was frozen for 28% of workers in the three months to end October 2011, compared to 25% for the previous quarter. This situation is likely to continue for public sector workers next year and XpertHR is predicting that 10% of private sector workers will see their pay frozen in 2012 as well. And to add insult to injury, the coalition is now telling public sector workers that pay increases will be capped at 1% from 2013 and, if they succeed in introducing regional pay, millions of nurses, teachers, council workers and others will experience further cuts in their standard of living.

There are no such restrictions in the pay of Britain’s top bosses, however, and a recent report from the High Pay Commission showed that not only has their pay been motoring away ahead of ours, but some have enjoyed increases of up to and above 4,000% in the past 30 years.

Total pay for lead executives in BP, for example has increased by 3,006.5% since 1980 and has increased from 16.5 times’ average pay to 63.2 times’ average pay during that period. In Barclays, the total pay of lead executives has increased by 4,899.4%, with the multiple of average pay increasing from 14.5 to 75. The increase in Lloyds was 3,141.6%, with the multiple increasing from 13.6 to 75. Not bad for companies which have contributed more than most to either ecological or economic disasters over recent years!

Average total pay (including bonuses) is now £463 a week, according to the ONS, with average regular pay at £436 a week. LRD estimates that average full time pay is £618 a week. Average pay for the CEOs of FTSE 100 companies, according to the High Pay Commission, is £80,769 a week (£4.2 million a year). So much for all of us being in this together!

Richard Lynch is a Dudden Hill resident. He is a retired Unite the Union official and currently conducts voluntary work on employment rights for the Brent Community Law Centre. He also acts as an accompanying representative for the GMB union.


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