The Weekly paper of the New Communist Party of Britain
Week commencing 17th March 2023
The Weekly paper of the New Communist Party of Britain
Week commencing 17th March 2023
The Weekly paper of the New Communist Party of Britain
Our ‘betters’ in the bourgeois media frequently inform the working class that it is a bad thing to demand a pay rise as this only fuels inflation which only makes things worse.
This is, of course, a load of rubbish. Hard-fought wage increases are very rarely the cause of inflation. It may happen in a few cases, such as couriers win a half decent wage resulting in the price of a takeaway going up to compensate, but these are the exception rather than the rule.
Unite the union has looked at the profits made by those companies making up the Financial Times Stock Exchange (FTSE) 350 index of major companies listed in London, comparing the pre- and post-pandemic figures.
It has helpfully produced a 150-page report aptly entitled {Unite Investigates: Profiteering across the economy – it’s systematic}, which is partly digested below and can easily be downloaded from the Union’s website.
It notes that overall profit margins in the first half of 2022 were 89 per cent higher than in the same time in 2019.
In her comments about the findings, Unite General Secretary Sharon Graham said: “We’re in the midst of a cost of profiteering crisis … The profiteering crisis isn’t just a few bad apples, it’s systemic across our broken economy. Entire industries are choosing to take advantage of a crisis, resulting in the spiralling prices of goods we all need.” Good for them, that is exactly how capitalism works.
She concluded with the obvious point that: “When the profits of Britain’s biggest firms have spiked 89 per cent don’t tell me the money isn’t there for the pay rises workers need and deserve.”
The union’s first profiteering report, published last July, demonstrated that FTSE 350 companies rose by 73 per cent compared with 2019, but that was comparatively bad year.
The most obvious aspect of this profiteering is when electricity and gas bills drop into the email boxes. The present windfall taxes on energy profits do very little and they are full of get-out clauses, for clever lawyers to drive a coach and horse through.
Unite dismisses the common justification for recent price rises that are “supply shocks”, such as climate crises, post-pandemic disruptions and events in Ukraine, which many suppliers used to justify inflation.
Readers of a certain age will be aware that increases in wholesale oil prices have a speedy impact on increases in petrol pump prices, but that falls take a long time, if any, on retail prices. Adam Smith’s ‘Invisible Hand’ is more invisible at some time than others.
Leaked Treasury forecasts show that gas and electricity producers are on track to make excess profits of up to £170 billion over two years.
Major supermarket chains are boosting profits by increasing prices much more than supply costs. There is also evidence that that they are exerting increasing pressure on smaller suppliers who depend on the good grace of the supermarkets to allow them on the shelves. Thus, the top three UK supermarkets – Tesco, Sainsbury’s and Asda – doubled their combined profits to £3.2 billion in 2021. Food prices have also seen huge increases that are caused by profiteering and not by greedy peasants selfishly demanding to be paid more than 50 pence per day.
Droughts, fires and floods are always good for business. Here again the supermarkets are the major beneficiaries. The three top British chains did well out of the pandemic. Wage increases at these companies require hard-fought battles whilst polite discussions in the boardrooms are enough to magically increase dividends for corporate shareholders.
Food manufacturers are also doing well, even if they are sometimes at the beck and call of supermarkets. The eight major UK food manufacturers raked in £22.9 billion profits in 2021, more than a fifth over pre-pandemic times. By far the biggest was Nestle, notorious for supplying free formula baby food to Third World mothers so that breast milk would dry and force them to later buy their product. They alone accounted for a profit of £13.7 billion, up a third from 2019.
Further down the literal food chain are the four main UK fertiliser producers, who saw their post-pandemic profits rise by 23 per cent at a time when they were laying-off workers and moaning about increased energy costs.
Less immediately obvious to the consumer is the profiteering by the world’s largely agribusinesses – ADM, Bunge, Cargill and Louis Dreyfus – which dominate important crops such as the grain market. Their pandemic profits rose 255 per cent.
Also doing well are the top 10 semiconductor manufacturers, whose profits rose 96 per cent.
In a globalised world where a computer comes with parts and attachments from umpteen different companies, transport is particularly important. Transport companies are masters not just of the high seas, but of profiteering that makes Blackbeard look like a rank amateur. The eight top shipping companies saw their profits rise no less than 20,650 per cent (no typo!). In the light of that we can be grateful that the biggest road freight operators only increased their profits by a mere 149 per cent. It is against that background that P&O sacked its workforce and delivery drivers struggle for a decent wage.
As real wages in both the public and private sectors have fallen in recent years, the notion that wage demands fuel inflation is nonsense. Whilst the media tell us this, Unite has dug up a wealth of quotes from businessmen themselves to refute this; they like to boast about their roll in pleasing their shareholders so they are not very discreet.
Many years ago the founder of Scottish Television said his commercial station was a license to print money. Today BP’s CEO took a more modern stance by saying BOP was a “cash machine”.
Petrol, which is essential even for non-drivers, is always a money spinner. When the price of crude oil is low profits can be made both at the refinery and at the petrol pump, and when crude prices are high it is a perfect excuse to raise prices at the pumps.
In Britain just six refineries control almost the entire UK petrol supply. In the course of 2022 the profit refiners made on wholesale petrol tripled from 10p to up to 35p per litre. The wages of North Sea oil workers, delivery drivers and petrol pump attendants (if any exist in the self-service world) have not risen to anything like that.
It is not only the oil companies who benefit from high fuel prices. It is a nice little earner for supermarkets, although it is impossible to disentangle fuel profits from that made on food. The Royal Automobile Club (RAC) says supermarkets and other retailers rake in an extra £84 annually.
Domestic energy bills are at an all-time high, forcing even a right-wing Tory government to step in in case too many elderly genteel voters freeze to death before the next General Election.
Generating companies increased their prices five times in 2021, simply because drastic rises in gas prices enabled them to do so. About 40 per cent of electricity is generated from gas, but that was simply an excuse for the much larger rises. The Big Four energy companies – Centrica, E.ON, EDF and Scottish Power (the latter is actually Spanish) – saw their combined 2021 profits rise by 84 per cent to £9.5 billion in 2021. They have also benefitted from smaller supply firms going bust. Those involved in production and distribution do best, as any short-term losses on the roundabouts can be made up on the swings. Even the Treasury admits that UK electricity generators have already made more than £10 billion in “excess profits”.
When Centrica, British Gas’s owner, had a £3.3 billion profit for 2022, the CEO said it was: “the most challenging energy crisis in living memory” – but the prize for brass neck must go to the CEO, who warned consumers would have “extraordinarily high fuel bills for at least 18 months” yet announced first-half profits of €2.5 billion and an increased share-holder dividend.
During and after the pandemic there was much weeping and wailing about shortages of new cars, but this was a blessing for all concerned in the industry. The second-hand industry (closely linked to the manufacturing industry) did well, and even if fewer people were buying new cars they bought more spare parts, before “normalcy” resumed when car prices rose substantially. As a result, major car dealerships increased both profits and margins by 110 per cent, whilst making redundant 7,410 second-hand car dealers.
Amongst other sectors, the road transport industry seem to have overcome the problems of fuel price rises and driver shortages to do very well for themselves if their profit figures are anything to go by. Profit margins of major road freight companies rose 67 per cent between 2019–2021, with margins doubling.
Another group of profiteers are the owners of British ports which are now privatised. The UK is the costliest destination, with it costing 25 per cent more to ship a container from Shanghai to Britain than to Rotterdam.
The largest owner is ADP, which made £126 million net profit in 2021 with a margin of 21.8 per cent; at the same time Peel Ports made £143 million with 24 per cent margin.
Although the Unite report does not actually use the word ‘nationalisation’ in the report, it gives plenty of examples where it is urgently requuired.