What does the Autumn Statement mean for pay?
In today’s Autumn Statement, the Chancellor Philip Hammond was at pains to say he wanted “an economy that works for everyone”. For most people, a key measure of success will be whether they have decent wages coming in. We had a look through his mini-budget and found he's still got an awful lot to do.
In fact, the government’s Autumn Statement has not done anywhere near enough to lift pay out of the doldrums. Today’s accompanying Office of Budget Responsibility forecast shows that the average annual wage will be £1,000 lower in 2020 than predicted at the March Budget. Bear in mind that even without this new loss, our real wages have still not recovered to their 2007 levels.
A twin focus on creating more good jobs and making existing jobs better will be needed in the coming period. More spending on infrastructure announced in the Autumn Statement could go some way towards changing the mix of jobs for the better, at least in terms of pay.
The public sector pay cap is also a serious problem that has a negative effect on public services and the people who work in them. Public sector workers are still more than £2,000 per year worse off than they were in 2010 in real terms, as a result of years of pay freezes and caps. This statement didn't change that.
The most welcome piece of news today was probably that the government announced that the minimum wage for those aged 25 and above will increase by 30 pence next year. This will give a modest boost to a couple of million low paid workers, although joy is somewhat tempered by the fact younger workers are getting left further behind.
The partial reversal of the major cuts to Universal Credit is also a modest step in the right direction for working families on low incomes, but it doesn’t come near to giving the help that help that is really needed by hard pressed families who are just about managing.
TUC General Secretary Frances O’Grady said:
“This is yet another blow to ordinary working people’s standard of living. And far from being focussed on ‘just about managing’ families, this shows up the government’s plans as inadequate.
The Chancellor’s statement also leaves public sector workers such as home helps, firefighters and nurses facing continued real terms pay cuts. Unfortunately, the Chancellor missed the opportunity to help them, repeating the mantra that 'controlling public spending is compatible with world-class public services and social improvement.' Sadly, that’s not how it feels on the ground.
These are political choices. The Chancellor has chosen tax cuts for corporations and the better-off, rather than putting money in the pockets of ordinary working people.”
Poor pay growth is hurting both workers and the economy. Britain is left still needing a pay rise.