The fallout from the global credit crisis, a toxic mix of rampant inflation and stalling economic growth, is wreaking havoc on the budgets of local workers.
The latest research, commissioned by the Northern Bank, reports that half of all working people in Northern Ireland have spent more money than they earned each month in 2008 so far. Data released by the Office for National Statistics indicates the economy is declining at a faster rate than expected. As inflation shows little sign of calming, many households are now braced for a difficult summer.
With oil hitting a record $143 a barrel, the cost of heating oil, petrol and diesel will continue to rise. Electricity and natural gas prices are also expected to increase, with Phoenix, for example, refusing to rule out further rises, despite hiking prices by 28% in May. Additional pressure is piled on by the surging price of food, with the average grocery bill rising by 23% over the past year. Only house prices appear to be falling, at a rate of 18% since June 2007, thus placing thousands of families in the perilous position of negative equity.
Given these statistics, it is unsurprising that the government’s official inflation rate, 3.3%, is met with derision. This figure, based on the Consumer Price Index (CPI), is skewed by sharp falls in the price of some “high-end” items, particularly electronics and home appliances. To working class families, who spend a disproportionate amount of their budget on basics like food and energy, the fact a particular coffee machine has halved in price means little. The real inflation rate is likely to be well above 10% for those on below average salaries.
After the recent 10p tax fiasco and years of widening income inequality, few are surprised to see a “Labour” government peddle the old lie that wage rises cause price rises. The blame for current price inflation lies squarely with their friends in “the city,” who are shifting billions of dollars from volatile financial products to oil and food commodities, safe in the knowledge that demand is assured by people’s basic needs.
But Chancellor Alistair Darling argues “Every worker, from heads of blue chip companies to an office or domestic cleaner" must now accept pay restraint! With boardroom pay at the top UK companies having rocketed 37% last year, this is pure fantasy. Instead, to protect profit margins, they expect workers to take the hit. The situation is even more acute in the public sector, where workers are expected to accept derisory 2.5% pay offers “for the good of the economy”, while top executives walk away with golden handshakes worth hundreds of thousands.
Workers must now organise to maintain a decent standard of living. The first blow has been struck by shell tanker drivers who won a 14% pay rise over two years. Next it is local government workers who are in the front line of the struggle for a wage rise that at least keeps pace with the real rise in the price of essentials like food and fuel.
The Brown government, along with all the parties in the Assembly Executive, are determined to force what amounts to a pay cut on public sector workers. The public sector unions must respond by joining forces with their local government colleagues and launching a determined fight to stop the pay erosion.
A date should be set for a one day public sector strike as the start of a pay campaign that will halt the Brown government and its lapdogs in the Assembly in their tracks.
