Frances O'Grady column: North East is not seeing wage growth it needs

General Secretary of the TUC says too many people in the region earn less than the living wage

Trades Union Congress TUC General Secretary Frances O'Grady
Trades Union Congress TUC General Secretary Frances O'Grady

Listening to some ministers you could be forgiven for thinking that Britain’s cost of living crisis never happened and that we are, in the words of the George Osborne, “on the path to prosperity”.

But the figures are clear. UK workers have endured the longest real wage squeeze since records began in the 1850s.

Even with inflation hitting record lows – the result of falling energy prices rather than any action by the Government – it is still going to take years for wages to recover to their pre-recession levels.

Analysis published by the TUC this week shows how much damage has been done to living standards in the North East over the last few years.

Average pay in the region has fallen in real terms by over £1,600 since 2010.

It is a different story, though, for those at the top. FTSE 100 chief executives saw their pay go up, on average, by a whopping £700,000 (26%) in real terms between 2010 and 2014. And the 100 richest people in Britain saw their wealth increase by £40bn in 2014 alone.

The North East is not seeing the kind of sustainable wages-led growth that we need. One in five of its workers earn less than the living wage and a growing number find themselves trapped in insecure jobs.

Five or six years ago zero-hours contracts were very much on the margins of the labour market, but they have now become a popular way for bosses to employ staff on the cheap.

Zero-hours workers earn, on average, nearly £300 a week less than permanent workers. Zero-hours contracts sum up what is going wrong in the modern workplace. They shift almost all power from the worker and give it to their boss.

It is small surprise that more and more people in the region are becoming dependant on foodbanks to get through the month. According to the Trussell Trust, the number of people needing emergency food aid in the North East has gone up six-fold from 10,510 in 2012-13 to 59,146 in 2013-14.

Low pay was the second most common reason for referral. Try telling those workers they are on a path to prosperity.

The bottom line is that without fair pay for the many we will not build a recovery that is fair and sustainable.

And that is bad for Government too. Badly-paid people pay little tax. The government has badly failed to meet its target to reduce the deficit not because it has not made deep cuts, but because it has collected far less tax than it expected. This is down to the rise in the numbers of people going into low-paid work and the sharp growth in self-employment, much of which is poorly paid.

This is why the TUC is this month organising Fair Pay Fortnight – a series events and street stalls throughout Britain and the North East – to campaign for ordinary workers to get a fair share.

We need to put fair pay at the top of the political agenda as we head towards the election. People need more money in their pockets if local economies and communities are to thrive.

Frances O’Grady is TUC General Secretary

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