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New Communist Party of Britain


Wages, the length of the working day, pensions, retirement age and job security are all elements of the social wage, which have been won by workers engaged in the class struggle against the ruling class and its representatives.

The Office for National Statistics Annual Survey of Hours and Earnings (ASHE) in 2011 reported that the median weekly wage for workers on adult rates was £403, an increase of 15 per cent since 2005. It also reported that the pay gap had widened between rich and poor, with the top 10 per cent earning more than £894 per week, an increase of £128 or 17 per cent since 2005. Those in the bottom 10 per cent saw their incomes increase by just 12 per cent to £118 per week.

As prices have increased by 26 per cent since 2005 and median wages by just 15 per cent, there has been a significant erosion in living standards since 2005.

In every month since 2002, except for part of 2009, inflation has been above the Bank of England’s target of two per cent. The ruling class preferred method of controlling inflation is by increasing unemployment and reducing wages. In 2008 Mervyn King, governor of the Bank of England, stated that he wished to engineer just enough job losses to lower inflation to the two per cent target rate. He did not succeed in reducing inflation but he did in increasing joblessness. When inflation reached 5.6 per cent, in September 2011, Ben Broadbent, a former Goldman Sachs economist and newly-appointed member of the Bank of England’s Monetary Policy Committee (MPC), suggested that inflation targeting should be dropped when he said: “It is better to have slightly above target inflation, and to reduce incomes that way”. His statement exposed the real purpose of the Bank of England MPC as one of shifting wealth from workers to the rich.

In October 2011 clothing and footwear inflation was 12.6 per cent and in March 2012 meat inflation was 6.1 per cent.

The end result has been, according to the Office for Budgetary Responsibility (OBR), that by the end of 2011, household disposable income had fallen by 2.3 per cent, a post-war record. Mervyn King, in January 2012, observed that wages had endured their longest period of stagnation since the 1920s. The ruling class would no doubt consider this a job well done.

In 2009-2010, after housing costs, there were 13.5 million people, including 2.6 million children, living in poverty. Of these over two million are thought to be in extreme poverty, living on just 40 per cent of the average income.

Another important source of income for the working class is pensions, which are deferred wages. Many workers are losing substantial amounts of future income due to the private provision of pensions and the method by which they are funded. Most employers are closing down, or have closed, occupational defined benefit schemes in favour of defined contribution schemes. Defined benefit schemes paid pensions as a proportion of final salary whereas for defined contribution schemes the size of a pension is determined by the amount of money a worker can save over their working life, which is unprotected from the ups and downs of the stock and money markets.

Those workers who are still in defined benefit schemes have had the value of their future pensions considerably reduced by employers arbitrarily changing pension scheme rules to exclude pay increases from pensionable final salary, or lengthening the period over which it is calculated from, say, the last year to the last five years. Some have even changed the rules to career averages, reducing future pensions even more.

Reducing pensions even further, the last Labour government, in 2005, halved the maximum level of inflation-proofing that pensioners could enjoy from five per cent to 2.5 per cent. Employers, not unexpectedly, welcomed this as a sensible move as it would increase their profits by between £250 and £400 million a year.

Those workers who are in defined contribution schemes have to rely on the money markets or buy Government gilts, to build a fund with which to buy a pension on retirement. In recent years the value of these pension funds have shrunk as stock markets tumbled.

If that was not bad enough the Labour government, in reacting to the crisis and in an attempt to save the banks and protect profits, introduced quantitative easing (QE), a scheme whereby the Bank of England printed money to buy financial assets from banks and private companies. Whilst this increased the amount of monies available for profit, it devalued the individual pension funds and future pensions of workers. The end result was that for a worker retiring in 2012 the pension that they get will be 30 per cent smaller, assuming the same size pension fund, than a worker who retired in 2008.

It is estimated that for someone, in a defined contribution scheme, to get an inflation-linked pension that supplements the state pension to give an income of just above the poverty line, would require an individual savings of about £210,000, an almost impossible target. The average is £25,000 which would buy a pension of about £19 per week and if combined with the state pension would give an income of £126 per week, which is less than half of what is regarded as the socially accepted level of income to stave of poverty.

With the prospect of retirement with an almost worthless pension, it can be of little surprise that the proportion of workers working past retirement age has increased from 7.6 per cent in 1993 to 12 per cent, 1.4 million, by 2011. Many have no choice but to continue working because of inadequate pensions.

For all those in work, wage growth is being suppressed through a variety of mechanisms, such as forcing the most vulnerable, single parents, into low-wage jobs and once there ensuring that they stay there, through the shift from out-of-work to in-work tax credits. This subsidy to capitalism is a mechanism to pay wages that are so low a growing number of workers become excluded and marginalised from participating in activities such as visits to friends, family, the cinema, theatre and other cultural, social, sporting and political activities, which in any decent society should be considered the norm for all. This deepening of the poverty trap and accompanying social exclusion brings about a reluctance amongst workers to fight for wage rises and increases.

The fight for higher wages and pensions has also been hamstrung by current anti-trade union laws. In the past the boom and bust cycles, brought about by the incessant competition of capitals, has to a certain extent been smoothed by the relative strength of the labour movement. Organised workers have the potential to resist wage cuts during slumps and demand higher wages during the booms. The automatic stabilisers, notably social insurance payments and progressive income tax that go towards funding state welfare, also tend to dampen down cyclical fluctuations. The attack on trade union rights since the mid-1970s, is one of the reasons why this slump has such a grip on Britain than anywhere else.

None of these stabilisers was yielded out of the wisdom of the capitalists, but rather as reluctant concessions to the organised strength and struggles of workers in trade unions and other anti-monopoly forces.

Despite the anti-trade union legislation and the actions of the courts in invalidating strike ballots, workers are challenging their employers on a wide range of issues. There were 1.3 million days of strike action in the 12 months to April 2011, a significant increase on the previous years.

Wages and jobs are both undermined by the Government’s use of workfare schemes, which force the long-term unemployed and the long-term sick and disabled who are ruled to be “capable of doing some work” to work for nothing.

The employers used in these schemes include the public sector, the private sector and some charities. Apart from the injustice of forcing people to work for nothing except their taxpayer-funded benefits (JSA and ESA), every worker working for nothing replaces a worker who would have been doing this job for a proper wage, who is then also forced on to unemployment benefits - increasing the number of unemployed claiming benefits. The only real beneficiaries are the employers who are getting free labour funded at a pittance by the taxpayers. There is no evidence that these schemes do lead to regular full time jobs for those forced onto them.

Hard-won wages and conditions agreements secured by unions are undermined when waged workers can be replaced by those on workfare schemes. It is not unknown in the public sector for people to be made redundant and later, as long-term unemployed, be forced to do their old job for no wages.