Lewis Akers

Lewis Akers

The New Inflation and the Fight for Pay

Reading Time: 4 minutes

If you are finding your Christmas shop pricey, that might be because inflation is at a 30 year high. What is causing this, and how can workers respond? Lewis Akers says we need to generalise the fight for inflation-busting pay rises.

This year, Unite General Secretary Sharon Graham won office on the promise of turning to workplace organisation and away from the internal machinations of the Labour Party. With workers throughout the pandemic facing fire and rehire tactics alongside job losses, stagnant pay and health and safety fears, her promise to advance workers’ conditions rather than “battening down the hatches” struck home.

As part of this focus, she has been spearheading disputes to increase the pay of the lowest paid workers. Her union has racked-up an impressive list of pay deals in her first 100 days in office. Many of these, like the up to 21% pay rise for first bus drivers, have been inflation busting victories.

These victories, and those of other unions, have coincided with the highest rates of inflation in decades. The regime of low inflation economics which has prevailed for decades seems to have come apart. What do these twin pressures mean for the workers’ movement?

Inflation vs Wages

Inflation affects the prices of goods that workers rely on – basic necessities like food, electricity, petrol and a range of other commodities. An increase in the costs of these goods hits workers in the pocket and leaves them worse-off. Research by Unite has shown that across the board the price of these essentials has risen, whether it be increases in motoring expenditure by 15.1% or fuel and lighting by 24.1%. If a worker’s pay increases by 2% but inflation (calculated across a range of goods) is sitting at 5% workers are still 3% worse off in real terms when they go to the supermarket or fill up their car. These pressures are part of the backdrop to several current industrial fights, including the UCU strike. Lecturers within higher education are now 20% poorer in real terms than they were in 2009. That decade was one of profound attacks on wages, with the 2010s the weakest ten years for wage growth since the Napoleonic wars. According to the (not exactly radical) Institute for Fiscal Studies, wages will continue to fall into the 2020s, with an average loss of £13,000 per worker by 2026.

But the impact is even more acute if we assume that the figures used to calculate inflation are biased against working class spending habits. The Consumer Price Index (CPI) is the bosses favoured measurement of inflation, and also the most commonly used to produce official statistics. Bosses favour this measure of inflation because it is un-reflective of real costs for workers. The Retail Price Index (generally recording a higher rate of inflation) does take housing costs into account and is more accurate. In November, RPI was 7.1% and CPI was 5.1%. This 2% difference for many could be the difference between putting meals on the table or heating their homes. And this is before we broach the matter that inflation is generally higher the further down the economic ladder one goes. The present inflation, based on supply-chain failures above all, means price hikes on some of the most basic goods that the poorest rely on.

How Do We Respond?

It is impossible for employers and capitalists to avoid blame for inflation today. In the 1970s, pioneering neoliberals often blamed inflation on union militancy and a ‘wage price spiral’. Today the situation is very different – decades of pay stagnation, as well as enforced pay freezes in the public sector, with bumper profits for big corporations.

Employees in unionised sectors have also experienced real terms pay cuts. In the context of weakened union organisation, instead of challenging employers some unions have been content to accept below inflation pay rises which leave workers worse off. This makes Unite and other union’s recent victories and above-inflation pay rises even more significant. It marks a change in the landscape on which pay deals are fought. Even a demand for above inflation pay increases breaks with decades of low expectations. This has been compounded by the tightening of the labour market after two years of pandemic disruptions, which has left some industries chasing workers and raising pay to attract them. There is an opportunity here to remind everyone where wealth comes from in our society – labour.

The shock of a debate about the economics of everyday life, and the spur it has given to a few well organised group of workers, bring inflation back onto the mainstream of politics. Although this does not represent the overcoming of the weaknesses of the labour movement, it does represent a modest recovery in terms of trade unionists asserting themselves for pay rises which will have a staggering material impact on the lives of their members. It is crucial that as trade unionists and Marxists we build on this modest recovery to build towards a trade union movement that is able to regain not only its industrial strength but also its influence over political and societal questions.

There should be a debate about how this can best be done, one that recognises the real and continuing weaknesses of our movement. Most workers are not members of unions, and for every stunning victory over pay, there are more workers losing pay to inflation. But there are also real struggles achieving pay rises that would have seemed impossible a few years ago. The question for all of us now is how to generalise these victories and the mood they correspond to.

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