Economic glitter can’t hide rotting core as Bank of England halves wage growth prediction
Conrad Landin in the Morning Star
THE Bank of England dramatically ditched its forecast for a real-terms increase in wages yesterday but cloth-eared ministers are still boasting of a measly fall in unemployment figures.
Bank officials slashed its prediction for pay growth by half — from 2.5 per cent to 1.25 per cent — meaning that wages will grow by less than inflation.
City commentators warned the bank is now less likely to increase interest rates in the autumn.
The news came as TUC general secretary Frances O’Grady blasted the government’s jobs strategy, saying new figures that show 132,000 fewer unemployed people are a mark that “the government is very good at creating low-paid jobs.
“The government is struggling to create the better-paid work we need for a fair and sustainable recovery,” she said.
“It is hugely concerning to hear that the bank has cut its forecast for wage growth in half.
“The economy’s getting bigger but not better, with Britain’s pay squeeze now set to continue even longer.
“If people don’t have money in their pay packets to spend on goods and services it’s hard to see how we can return to sustainable growth.”
Work and Pensions Secretary Iain Duncan Smith claimed that new employment figures showed the Con-Dem government was ending a “cycle of welfare dependency.”
But Unison general secretary Dave Prentis slammed the coalition for creating shoddy jobs and leaving Britons’ livelihoods in a precarious position.
“Underemployment is now a bitter reality for millions of struggling families across the UK,” he said.
“Too many people are stuck in minimum-wage jobs, on zero-hours contracts and part-time work when they are desperate to go full time.
“Desperate because they need regular, secure employment to feed their families without having to resort to foodbanks, pay their bills without falling into the grip of pay-day lenders and decent pay to rebuild consumer confidence and grow the economy.”
Left Economics Advisory Panel co-ordinator and author of The Failed Experiment Andrew Fisher said:
“There has been no recovery for the majority of workers and this is confirmation that there will be no recovery any time soon.
“While executive pay rose by over 14 per cent last year, regular pay rose by only 0.6 per cent in the last year.
“This is a reflection of the balance of power between a deregulated labour market wanted by business and delivered by government versus an overly restricted trade union movement.
“If Labour wants to end the cost of living crisis, unshackling the unions would be the most effective way.”
Unemployment has now fallen by 437,000 over the past year, although the less-massaged “economically inactive” figure has soared to 8.8 million, a rise of 15,000.