inflation | ukwatch.net

People Before Profit Charter strikes a chord across the picket lines

JamieSW — Wed, 23 Jul 2008 13:41:02 +0000

The cost of food, petrol and fuel is going through the roof, with gas bills predicted to hit £1,000 a year in coming years. Meanwhile workers are being told they have to swallow pay cuts in real terms.

Yet at the same time chief executives at the BBC and Network Rail are getting bonuses and pay rises of hundreds of thousands of pounds.

All this has underlined the urgency of the People Before Profit Charter, which lays out ten demands to defend workers’ living standards in the face of mounting economic crisis.

Magnificent

Hundreds of people have signed up to the charter since its recent launch, including many involved in last week’s magnificent strikes by local government and Argos workers

“I visited the picket line at Argos’s Bridgwater depot last week,” reports Simon from Bristol. “Some 37 pickets signed the charter.”

Many people reported great enthusiasm for the People Before Profit Charter from council workers’ picket lines on Wednesday and Thursday last week.

The week before some 17 striking workers at the British Museum signed up to the charter. Others signing it include Jeremy Dear, general secretary of the NUJ journalists’ union.

The People Before Profit Charter has been launched by trade unionists, housing campaigners, students and pensioners as a response to attempts by bosses and government ministers to make workers pay for their economic crisis.

The charter’s ten points put forward proposals on a number of issues that would improve the lives of millions of people.

These include decent pay rises, taxing corporations, improving workers’ rights, opposing privatisation, building council homes, opposing racism and war, improving pensions, abolishing tuition fees and increasing the minimum wage

Supporters of the charter are now calling on people to raise support for it in their local union branch, pensioners’ group, student union, housing group and other campaigns.

People should also continue to ask their workmates, neighbours and friends to sign up to the charter. The level of support already garnered shows how deep the anger and concerns of working people go.

The People Before Profit Charter can help to mobilise the growing resistance to the attacks on workers – and it can help provide a left wing answer to the current crisis and halt the right in its tracks. Put your name to it, if you haven’t already.

Sign up to these demands

Wage increases no lower than the rate of inflation as given by the Retail Price Index. No to the government’s 2 percent pay limit.
Increase tax on big companies. Introduce a windfall tax on corporation superprofits, especially those of the oil companies.
Repeal the Tory anti-union laws. Support the Trade Union Freedom Bill.
Unsold houses and flats should be taken over by local councils to ease the housing crisis. No house repossessions. For an emergency programme of council house building.
Stop the privatisation of public services. Free and equal health and education services available to all.
End the occupations of Iraq and Afghanistan and use the money to expand public services. Stop the erosion of civil liberties.
Abolish tax on fuel and energy for old people and the poor. Re-establish the link between wages and pensions.
No to racism. No to the British National Party. No scapegoating of immigrants.
Reintroduce grants and abolish tuition fees for students.
Increase the minimum wage to £8.00 an hour.

Many workers and trade unionists are now engaged in strikes and protests to defend their pay, jobs and services.

We pledge ourselves to support their action and to support the campaigns that are dedicated to protecting working people, including

Unite Against Fascism
Public Services not Private Profit
Defend Council Housing
Stop the War Coalition
Keep Our NHS Public

Recent signatories include:

Tony Benn, NUJ general secretary Jeremy Dear, Jeremy Corbyn MP, POA general secretary Brian Caton, PCS vice president Sue Bond, CWU vice president Jane Loftus, Bfawu general secretary Joe Marino, John Pilger, chair of FBU South Wales brigade Cerith Griffiths, PCS DWP group executive member Helen Flanagan, vice chair of PCS Wales committee Marianne Owens, Unison Wales youth forum chair Chris Daw, PCS rep Cardiff magistrates court Liz Taylor, Unison rep in Vale of Glamorgan Karen Tyre, Lambeth Unison rep Jon Rogers, Stop the War Coalition national convenor Lindsey German, former leader of Lambeth council Ted Knight, Lambeth college UCU branch secretary Susan McDowell, Croydon Unison branch secretary Malcolm Campbell, Lambeth Unison convenor for finance and resources Chester Danners, Newham Unison branch secretary Irene Stacey, PCS Defra London branch organiser Niaz Faiz, Socialist Worker editor Chris Bambery, senior regional Unite industrial organiser Livie Reid, Argos Unite reps Nigel Jones and Joely Bendall, Unite convenor for Bristol council Steve Panes

All signatories are in a personal capacity

The crisis fuels discontent

JamieSW — Fri, 18 Jul 2008 12:12:53 +0000

Where did it all go wrong for Gordon Brown? Was it his failure to call a general election last October? Was it the attempt to impose a pay freeze? Was it the vote in parliament to extend detention without trial to 42 days? Just one year into Brown's premiership a recent Gallup poll showed Labour's popularity at its lowest ebb of support since Gallup first asked people to declare their voting intention in 1943. The government is in a crisis that appears out of control and the central issue that is derailing Brown is the economic crisis.

This crisis is not confined to the boardrooms of big companies and the financial markets. This is a crisis that affects every single household in Britain. Rocketing price increases have become the topic of conversation on every bus, in every workplace and college. When basic foods go up by 12 or 14 percent everyone but the very rich feels it. One Daily Mirror front page stated: "Cost of living up 11.6 percent... Mirror index shock increase: food up 15 percent; transport up 16 percent; utilities up 13 percent."

The housing market, which once fuelled the boom, is now helping to precipitate the crisis. Repossessions have doubled in the last year, house prices are falling but at the same time people's mortgage payments are actually rising as fixed payment deals expire and interest rates rise. The Guardian financial pages reported that there has been a 60 percent fall in people buying new build houses in the last year.

Rising fuel, food and transport prices are causing misery for millions. But how has the government got into this mess? Only a few years ago Brown was boasting that his economic policies had got rid of the boom and slump cycle.

This is not an economic crisis confined to Britain: it is a world economic crisis creating instability across the globe. Capitalist crisis links the teaching assistant in Bradford who can't pay her gas bill with the woman who joins food riots in Senegal. The United Nations Food and Agriculture Organisation states that the world's poorest countries could see their annual food import basket cost four times as much as it did in 2000. According to the World Bank, food riots have already hit more than 30 countries in the past year.

There have been major strikes and protests across the world, including South Korea, Egypt, Spain and France. Last year right wing ideologue Nicolas Sarkozy won the French presidential election. He was being hailed as the new Margaret Thatcher, but one year later his plans to break the French unions and privatise industries lie in tatters as strikes and protests have shaken his government. The rejection of the Lisbon Treaty in Ireland is further evidence of increasing resistance to the political establishment and its neoliberal priorities.

This crisis and the resistance to it are not only creating a crisis of political legitimacy for mainstream parties but also creating the conditions in which many people begin to question the very nature of capitalism.

It is important to understand that Britain is not immune to this process. The struggle may not be as bitter and deep as some countries, but nonetheless it is growing and creating massive problems for the government. Many media pundits are already warning of a "summer of discontent". The detonator for this panic was the victory of tanker drivers employed indirectly by Shell. This small group of workers organised a militant strike that forced the bosses to concede a 14 percent pay rise over two years. The strike showed the willingness of private sector workers both to join the pay revolt and to give solidarity, even if it meant breaking the law.

This victory is also being used as a benchmark for other workers. In fact, the Financial Times expressed the growing concern of bosses that so many inflation busting deals are part of two and three year deals linked to the Retail Price Index, which a year or two ago employers clearly believed was a safe bet to stay low. But it reported that four out of five deals over 4 percent were not linked to the RPI and so have been won by unions. "Mr Darling and John Hutton, the business secretary, argued last week that the Shell settlement was a one-off. But other recent deals include Drax Power, which in April agreed a 7 percent pay rise for 600 workers [plus a £1,500 lump sum], forming the second year of a two year deal. Babcock Engineering recently agreed a 7.6 per cent increase with 500 workers. Barclays has implemented a 5 per cent pay increase for 55,000 workers at the bank, as the first leg of a three year RPI-linked deal".

This wage fight is continuing to escalate. As Socialist Review went to press half a million local government workers in Unison voted to strike over their pay. The action planned for July has the potential to intensify the wage fight, and unlike previous strikes this involves a Labour affiliated union. This will take place alongside action by other unions.

The PCS civil service workers' union passed a motion that is likely to lead to a national ballot over pay and other issues in September. The NUT teachers' union conference backed a ballot for further strikes as a follow up to the stunningly successful multi-union strikes on 24 April, which drew new layers of militant workers into the movement.

Pay cuts

The CWU postal conference supported a strike ballot over pensions, mail centre closures and defence of the post office network - and the leadership responded positively to calls for a mass demonstration at the Labour Party conference.

The fury over pay cuts - and the fact that those cuts are driven centrally by Gordon Brown - combines with a wider disillusion with Labour to produce an unprecedented questioning of the unions' links with the party. At almost every conference the issue of whether (or at least to what extent) to continue supporting Labour was raised openly.

The firefighters' FBU union broke from Labour in 2004 after the government had behaved so aggressively against the union during its national strike. At last year's conference some delegates called for renewed affiliation to Labour. This time there were only a handful of votes against the decision to remain separate from the party.

The GMB union voted overwhelmingly to remove funding from up to 35 Labour MPs who had not measured up to a union assessment of their "value for money". GMB leader Paul Kenny dryly remarked, "We've examined the records of MPs both at local level and national level and many are doing a fantastic job, but there are a number who seem at times to be embarrassed by their relationship with the union. We don't want to embarrass them by giving them union money."

Kenny also told the conference, "We are going to consider our affiliation levels to ensure they represent the realistic level of support within the union for the party."

At the CWU, motions to disaffiliate from Labour or to democratise the political fund were defeated heavily. But this was largely because the leadership had supported an emergency motion which said that unless the government had sharply changed its policies towards privatisation and the running of Royal Mail by March 2009 "then the CWU membership will be balloted on whether they believe the union should fund the Labour Party at the next general election".

Speaker after speaker (including several Labour members) spoke to underline that this was the party's "last chance". Setting this deadline defeated those who wanted an immediate change in the relationship with Labour. But it is now a ticking time bomb that could explode and cause serious damage to the party.

Even at Unison, where the leadership worked hard to prevent a discussion about Labour, the issue was forced on to the agenda. Towards the end of the conference the delegates have a chance to vote for motions they think should be shunted up the order paper. This year every region of the union decided that the priority was a motion on having a review of the union's political fund and support for Labour. In the event it was defeated, but only very narrowly.

Earlier, Unison general secretary Dave Prentis had to declare that the pay deal in the NHS (which the union leadership had pushed) would have to be renegotiated if inflation continues to rise. He warned Brown, "It's time for the government to raise our people up, or our people will bring Gordon down."

The background to the conferences is a collapse in support for Labour among its core supporters and a widening sense of opposition to the system - challenging neoliberalism is now common currency among trade unionists. For example, the NUT and UCU conferences both agreed to campaign against military recruitment in schools and colleges, and the question of how best to build opposition to the fascist BNP was discussed at every conference.

The bitterness about Labour was underlined by an opinion poll commissioned by Unison just before its conference which showed Labour's traditional supporters deserting the party in their droves. Almost half of those who have regularly voted Labour at past elections now say they are less likely to vote Labour than they were in 2005. In addition, 51 percent of the general public say they are less likely to vote Labour than they were at the last general election compared to 4 percent who say they are more likely.

Who could have believed that the man who replaced Tony Blair would have managed to drive Labour support down so far and so quickly, by his handling of the economic crisis? Bank of England governor Mervyn King made it clear that things are only going to get worse when he said, "Rising fuel, gas, electricity and food prices mean that average real take-home pay will stagnate this year. It will not be an easy time, and I know that some families will find it particularly difficult." A new study by accountants Grant Thornton reported that official figures show that income inequality under Labour so far is already higher on average than it was under Thatcher.

One thing is certain. As with any economic crisis in history the government and bosses want workers to pay the price. This has sometimes been successful in the past. Attacks on conditions and financial hardship in times of crisis can have the effect of subduing class struggle. But such attacks can also lead to people questioning the system and fighting back. Such periods of instability polarise society, as we are seeing now. But polarisation does not necessarily mean that people move to the left. The election results for the BNP and the rise in anti-immigration sentiments are proof of this, and a warning. Polarisation is exactly what the word means - a move away from the centre of politics.

The government is on the rocks. Millions of workers want to see a serious battle to defend living standards, to take action for affordable housing, to halt the spread of privatisation and to defend secure jobs. What socialists do and how they react to events will make a difference. The left has already played a major role in shaping the pay revolt as it has developed. The anger felt by ordinary members in unions like the PCS, NUT and UCU found expression in the lead given from the unions' leading bodies.

This in turn has increased the pressure on Labour affiliated unions like Unison to move. The left has won an argument over the idea of joint action and turned it into a reality. Socialists have to continue to place themselves at the centre of the moves for action and unity across the unions. That means pushing for joint action where we can and supporting initiatives like Public Services Not Private Profit, Organising for Fighting Unions and the National Shop Stewards Network that attempt to build unity between trade unionists nationally and in the localities.

The left also needs to be able to raise a political as well as an industrial response to the crisis. We need to popularise a set of demands that activists from different political backgrounds, or none, can rally round. And we have to continue to raise the urgent need for political alternatives to New Labour, no matter how difficult they are to construct. This year's union conferences with the increasing attacks by New Labour make this project more important than ever.

Inflation: the poor pay More

Ellie Keen — Sun, 29 Jun 2008 21:47:57 +0000

The rising cost of living is leaving millions of workers in Britain in poverty. Spiralling food prices have pushed inflation to a 16-year high.

Rises in the cost of food jacked up the official Consumer Price Index by 0.3 percentage points last month to 3.3 percent.

The slightly more realistic Retail Price Index – which includes some housing and other costs such as council tax – has risen to 4.3 percent.

The underlying reason for this is the spiralling cost of essentials. For instance, vegetable price rises almost doubled from 3.8 percent in April to 7.2 percent last month.

A basic basket of a dozen essential items has soared by an average of 23 percent in the past year. For example, 12 eggs, which cost £2 last May, are now £2.92 – a 46 percent leap. The price of a bag of rice has increased by 93 percent.

A chicken costs £1.50 more than 12 months ago and bread is up 28 percent, butter 30 percent and milk 17 percent.

Food prices across the board have risen by 6.6 percent in the last year, with the cost of staple foods soaring even faster.

A typical family’s annual shopping bill has gone up by about £1,000 in the past year – that’s an extra £2.70 every day.

Figures also show gas and electricity were 11.2 percent more expensive last month than May 2007.

They are set to go up by as much as 40 percent this year. This is another harsh blow for those who are already struggling with the average bill of more than £1,000 a year.

The average price of a litre of unleaded petrol was £1.11 in May, up 16.8 percent in a year. Diesel was up 26 percent to £1.21.

However, the truth about soaring prices is being systematically distorted. The reality is that the rate of inflation for ordinary people is rising twice as fast as the official figures show.

Based on Office for National Statistics calculations, a family in the south west of England with a mortgage and two children faces an inflation rate of 6.5 percent.

If they live in London it’s 7.3 percent. Pensioners are enduring even tougher times. One estimate shows they struggle with a real inflation rate of over 9 percent.

Elderly people are hit hardest by inflation because they spend a larger proportion of their income than other groups on basic goods such as food and fuel.

The official inflation rate is calculated on a basket of 650 goods. Some of the goods used are somewhat removed from most people’s reality – chocolate biscuits were recently taken out of the basket and champagne added in.

The Office for National Statistics also added fees for stabling horses to the basket of goods in spring this year.

But the real problem is the weight given to different items. Utility bills are given similar importance to luxury goods, for instance.

That means that falling prices for flatscreen televisions effectively cancel out rising gas bills in the figures.

So for the affluent, prices might be falling. But the daily necessities that all of us are obliged to spend money on are subject to massive price rises.

Pay, the fightback...

Ellie Keen — Tue, 10 Jun 2008 00:00:00 +0000

... and how much do you spend on your horse?

The fallout from the tremendous strikes and rallies on 24 April is continuing. Those who struck then are debating doing it again. Some of those who did not strike are discussing getting involved. And many others look on, wishing their own union leaders could be won to such action.

Gordon Brown's oft repeated determination to hold pay rises for 6 million public sector workers at half the rate of inflation must have lost Labour piles of votes on 1 May. But Brown shows no signs of backing off. This confrontation is a central economic and political issue. It poses the fundamental question of 2008: will workers agree to let their living standards be cut in order to bail out the bosses, the bankers and capitalism?

Over 400,000 strikers on 24 April gave a resounding message that they won't see their pay cut without a fight. The strikes reflected feeling over lack of staff, the penetration of private interests into the public sector and the oppressive power of management. But the main unifying issue was pay.

Now the chance exists to recreate that day on a higher level. Around 800,000 local government workers in Unison rejected their 2.45 percent offer and are now voting in a strike ballot. The initial indications are that the first strikes could be in early July. Teachers are discussing a further strike ballot in the autumn.

The 100,000 civil service workers who struck on 24 April could also strike again. July will see the 80,000 workers in the Department for Work and Pensions face the second year of an imposed deal which means 0 percent for 40 percent of the workforce.

At its conference the whole PCS civil service union backed a motion calling for a national strike ballot of 280,000 members over pay and other issues. Further education lecturers have agreed further strikes - in London on 9 June to coincide with the TUC lobby of parliament, and two days nationally in September. And at the CWU conference postal workers are to debate calling a national strike ballot over pensions. And there's also a fight in the private sector - over pensions at Grangemouth and with Unite promising a real challenge over pay on the London buses.

But for the revolt to come to fruition it will require a political battle at every level. Unfortunately the left lost its move for another ballot for a strike this summer at the NUT executive. After the May elections one section of the trade union leaders will demand that there are no strikes in case the government is weakened and the Tories benefit.

In some unions, especially those affiliated to Labour, there is heavy pressure from the top to damp down any fight. But even here the feeling from below has forced strike ballots.

Those who continue to argue for surrender ignore the fact that workers should only be loyal to a government that is loyal to them, not one that cuts their wages and privatises services. If the left does not give a focus to the anger against Labour then it is precisely the right that gains. This is the lesson from the 1970s.

A union movement that is hobbled and demobilised will be one that is demoralised enough to let the Tories in. Over the next few weeks there needs to be intense rank and file pressure to compel union leaders to call ballots, to win those ballots and, as far as possible, to secure coordinated action between unions.

And inside the unions' national and section executives the left needs to insist that the members' interests come first, not the interests of Labour ministers or the career prospects of Gordon Brown.

Fixing the figures

Galloping inflation is the major factor driving the pressure for a fightback over pay. Britain's rate of inflation rose to 3 percent in April, well above the pay increases offered to millions of workers in both the public and the private sectors. And the real rate of inflation for ordinary people is rising at least twice as fast as the official figures show.

The more accurate Retail Price Index (RPI) rate of inflation rose to 4.2 percent in April, up from 3.8 percent in March. But official figures released on 13 May showed food up 7.2 percent, household energy up 8.3 percent and transport fuel up 18.7 percent.

More detailed analysis shows spaghetti up 59 percent and baguettes up 23 percent. A basket of typical food essentials was up 19.1 percent on a year earlier.

Worse is to come. Wholesale price inflation, which is an indicator of future price rises, was up 6.2 percent in April. Gas and electricity prices are set to go up a further 15 percent this year, another harsh blow for those who are already struggling with the average bill of more than £1,000. No wonder that on 14 May Bank of England governor Mervyn King said, "There will be a squeeze on living standards over the next couple of years."

One traditional response when the figures look bad is to leave reality untouched, but to try to fix the figures. This is certainly happening. In the spring the Office for National Statistics added fees for stabling horses to the goods whose prices it measures to work out inflation.

Maybe there are millions of workers out there for whom this is a crucial component of their monthly budget. But I reckon it won't be much consolation as your food bill goes through the roof to know that some chief executive's dappled grey is still getting its board and lodging at a bargain price.

And while inflation rises, unemployment is also going up. One study in mid-May estimated that 1,200 people will lose their jobs every day over the next 18 months. Unemployment has been rising for the last three months and reached 1.6 million in March.

Meanwhile around 2.5 million credit card customers have had restrictions put on their accounts as part of the fallout from the "credit crunch". While most banks continue to make record profits, they have cut customers' spending limits, brought in annual fees and even closed accounts.

Those targeted are not those who use their cards indiscriminately. They are those who don't bring enough profit. Many use their cards rarely and pay off the balance in full every month.

A uSwitch survey found that 51 percent of the targeted customers were using their cards regularly and making at least minimum repayments. A further 20 percent were using their card regularly and paying their bill in full. Just 16 percent had exceeded their credit limit in the last year or missed more than one monthly repayment.

Why Pay Matters

Ellie Keen — Sun, 10 Feb 2008 00:01:39 +0000

Pay matters. So do public sector workers. Every paramedic, nurse, school meals worker and teaching assistant is an invaluable thread in the fabric of our society and economy. By setting a 2 per cent limit on public sector pay, the government is inflicting real pay cuts on the very people we all depend upon.

UNISON, with its 1.4 million members, the majority delivering public services, is part of the ‘Speak up for Public Services’ campaign launched by the TUC just a few weeks ago. We are united in our demands for fair pay for the six million public sector workers in the UK. They don’t drive inflation as has been argued in some quarters. Indeed, research by Incomes Data Services (IDS) clearly shows that this is not the case. Public sector workers, just like all other workers, need a living wage and this won’t be delivered through pay cuts. Leading poverty experts estimate that the minimum wage should be £6.75 per hour — a figure UNISON has firmly in its sights.

The Labour government inherited a recruitment and retention crisis in our public services. Cash was tight, morale was low and services suffered. A lot has been achieved since then, but those positive advances are threatened by a squeeze on pay. We must look to the future. Pay cuts put talented graduates off joining the public sector. Already students have complained to us that pay, conditions and bonuses are better in the private sector. We all want quality public services, but they do not come cheap. Staff deserve fair pay and good conditions.

Many public sector workers are low paid women. They often work part time and many are suffering the double whammy of unequal pay and real cuts in pay. When more women find it harder to make ends meet, they will be forced to claim benefits.

Each week new reports emerge of mounting household bills. These reports are a constant reminder that the cost of living is rising fast in the UK. We’ve seen huge hikes in energy costs. Even before these rises, one in six British households was facing fuel poverty — a disgraceful statistic in one of the richest nations. Families are forced to buy fuel through pre-payment meters, costing them an average of £195 per year more. Those who have least are forced to pay more.

Meanwhile, rich fuel companies are building up massive profits, driving inflation and reaping huge rewards. The government should take action against those companies, hold an enquiry into prices and levy a windfall tax.

Food inflation is running at 5.9 per cent — faster than at any time since the 1970s. And housing costs continue to rise — the latest Office of National Statistics figures show that housing costs take up the lion’s share of household expenditure at a massive 20 per cent. Price hikes in these three alone — fuel, food and housing — hit the low paid hardest and form an ever-increasing percentage of their expenditure. That alone should make the case for fair pay for public service workers.

It doesn’t matter how much the government quotes the CPI as a measure of inflation, people know that it does not reflect what is happening to the pound in their pocket. The RPI is a more accurate measure of inflation — it includes housing costs for a start. These factors should not be ignored in determining public sector pay levels.

We know that more cash can be made available to improve pay and conditions for public sector staff. For example, local councils have over-delivered on central government efficiency savings by £1 billion. By March 2008 total savings will be £4.25 billion. Why can’t these savings be invested in the workforce that local authorities and local communities rely on for the delivery of services?

If you want first class public services, if you want the sick and elderly cared for, your children well-educated and protected and your streets clean and safe, you have to invest in the workforce.

And remember, too, that public service workers have always been the Labour Party’s core supporters. They will feel angry and betrayed if they are singled out for such unfair treatment. UNISON is determined to secure decent pay rises for all its members.

Why Gordon Brown wants to hold down wages

JamieSW — Tue, 15 Jan 2008 20:09:58 +0000

Gordon Brown has ratcheted up his attacks on workers’ pay by demanding three-year below inflation pay deals in the public sector.

These deals – which Brown insists must be held below 2 percent even though inflation is more than double that – would lock millions into effective pay cuts for the next three years.

It is a further assault on the hundreds of thousands of working people in Britain who are already wondering how their wage can be made to stretch until their next payday.

According to a poll for the Norwich Union insurance firm, almost three quarters of monthly paid workers ran out of money last week and are now paying for food and other everyday necessities with a mixture of loans, credit cards and overdrafts.

But this situation does not seem to concern the New Labour government.

Brown says he is attempting to hold pay below inflation until 2012 – just as many economists are predicting inflation rates could rise to between 6 and 8 percent in the coming years.

Inflation has been on an upward trajectory for more than a year, with the cost of transport, housing, food and fuel rising fast. Food prices are rising at an average of about 5 percent and some suppliers have just announced household gas and electricity bills will rise by 27 percent this year.

That is why so many workers are finding themselves worse off compared to a year ago.

Difficult

Brown said he had taken the “difficult decision” to prolong the pay limits because the government wants to “break the back of inflation” and “maintain stability” in the economy. He said that unless we all carry on tightening our belts, pay rises will be eaten up by higher prices and increased mortgage and rent payments.

But wage rises are not what is driving inflation. Higher pay for nurses, teachers or street cleaners does not lead to higher prices. These are determined by much bigger forces in the world economy – such as the rising cost of corn, wheat, gas and oil.

Companies that increase their prices as a means of maintaining, or increasing, their profit margins are also driving inflation.

Brown hopes that public sector pay restraint will start to affect rates in the private sector too.

By holding down pay, British companies and their bosses can continue to line their shareholders’ pockets with profits and dividends, while the government can hold down public spending.

In turn that means that the government can keep down or cut taxes for big business and the rich. It means it can continue to subsidise bosses to keep them competitive with other countries’ firms.

All the talk of a “tough year” does not seem to have filtered through to Britain’s wealthy.

Boardroom pay at Britain’s top companies soared by 37 percent last year as directors were rewarded with inflation-busting increases in basic salaries, big cash bonuses and substantial payouts from share schemes.

The surge in pay, which takes the average total pay for a chief executive to £2,875,000, is more than 11 times the increase in average earnings and nearly 20 times the rate of inflation.

In 2006-7, for every £1 a worker earned, bosses took home £98 – up from £93 the previous year.

The picture for top executives in the public sector is not very different. A recent report into boardroom pay in the NHS shows that, among the trusts surveyed, the median average annual pay of chief executives was £123,300 – up some 7.8 percent on the previous year’s report.

Bosses are not the only ones exempt from the demands of tightening belts.

Anyone who works in public services knows the enormous waste involved in outsourcing work to “private contractors” – the swathes of consultants who litter our hospitals and civil service buildings, and the failed multi-million pound computer schemes that were supposed to make the public sector more efficient.

Brown has not called for any form of restraint from the profiteers of privatisation.

For all his tough talk, Brown’s attempt to impose an incomes policy through wage restraint is a sign of the government’s weakness – and an extremely risky strategy.

Previous attempts to control incomes have resulted in major confrontations with the unions, and have even led to the collapse of governments, such as Edward Heath’s Tory administration in 1974, which was brought down by a miners’ strike (see, 'Incomes policy: a dangerous strategy').

In that period governments talked of limiting prices as well as wages, and even suggested that their policy would benefit the lowest paid.

Today there is no sugar to sweeten the pill. One effect of imposing a wage freeze on such a large number of workers is to make the idea of workers in a variety of services striking together extremely attractive.

People rightly feel that all those who are under attack should hit back together, and that their union leaders should be co-ordinating the response.

This feeling is widespread within the public sector but extends well beyond it.

Over the last year millions of workers in the private sector have been able to secure pay deals that approach the government’s estimate of inflation.

Skill shortages and the fact that many engineering, pharmaceutical, chemical and transport companies have been making big profits have allowed unionised, and even non-unionised, workers to make some gains.

But it is possible that these same firms will use the prospect of a recession driven by a “credit crunch” to follow the lead of public sector employers.

United

Therefore a challenge over pay in 2008 has the possibility of uniting workers in all sectors and in all unions.

But for that to happen workers have to break the impasse created by the many union leaders who believe that workers’ interests must come second to the needs of the Labour government.

There is a heavy responsibility on the leaders of unions like Unison, which has over a million members in the public sector. Unison leader Dave Prentis responded to Brown’s plans to extend the pay limit, saying, “This is the most unjust pay policy I’ve ever seen.”

However, the experience of last year – when the union refused to lead a fight over pay in local government and the health service – shows that it will take heavy pressure from the rank and file of the union to make the leaders fight.

And, as the dispute in Royal Mail shows, there must be an organised rank and file in the union to carry forward that fight when the union leaders waver or seek a shoddy compromise.

Gordon Brown has shown that he has no intention of using his power to improve the lives of ordinary people. He wants to make workers pay for the crisis of capitalism.

The best way to force the union leaders to fight is to back any group of workers that stand up for decent pay. A breach of the government’s policy in one area could lead to its collapse.