The Tories are, unsurprisingly, trumpeting today's employment figures as further evidence that a strong economic recovery is underway. Unemployment fell by 48,000 to 2.47 million (down from 7.7% to 7.6%), the lowest level for nearly three years, and employment rose by 177,000 to 29.95 million, the largest figure on record (although the rate, at 71.8%, remains well below its pre-recession peak of 73.1%).
But they're less keen to draw attention to the earnings figures. Regular pay rose by just 0.7%, a real-terms cut with inflation at 2.2%, and the lowest figure on record. In the public sector, pay actually fell in nominal terms by 0.4%.
As well as enduring a living standards crisis, with the longest fall in wages since 1870, the UK is also suffering from a crisis of undermployment. There are now a record 1.46 million people working part-time because they can't find full-time jobs.
The squeeze goes on
The Tories remain confident that wages are a "lagging indicator" and that higher output will translate into higher salaries. As George Osborne remarked after the publication of the most recent GDP figures, "If Britain is growing then the finances of Britain’s families will start to grow."
For Labour, this optimistic analysis proves that the Conservatives have failed to grasp that the crisis is not merely cyclical but structural. The link between higher growth and higher wages has been severed and will not be easily repaired. Ed Miliband’s team points to the pre-crash period, when incomes for millions of low-and middle-income earners stagnated even in times of strong growth, as evidence that the market can no longer be relied upon to deliver for the majority. In an economy as unequal as Britain’s, any gains quickly flow to the top. If there is wage growth before the election, it will be of the unbalanced kind seen in April, when high earners collected their deferred bonuses in order to benefit from the reduction in the top rate of tax (the one month since May 2010 in which real incomes rose).
If Labour is right, it is hard to see the Tories winning the credit they hope for the recovery. Confronted by Miliband's "cost of living" offensive, their instinct remains to shift the debate back to the macroeconomy. But they should be wary of relying on this line of attack. To most voters, after all, living standards are the economy.