View all newsletters
Sign up to our newsletters

Support 110 years of independent journalism.

  1. The Staggers
22 June 2022

Stop telling people not to ask for a pay increase

Ministers are breezily talking about removing the cap on bankers’ bonuses. Restraint for thee; bonanza for me. 

By Jonn Elledge

On the morning of Tuesday 21 June, the Office for National Statistics decided to bring a little sunshine to our lives with the latest round of inflation figures. Between April and May, thanks largely to increases in the cost of food and non-alcoholic drinks, prices rose at a speed which, if continued, would amount to an annual rate of 9.1 per cent. The most dramatic increases in price were those of staples such as bread, cereals and meat. Alcoholic drinks are rising by quite a lot less, which is good, because after reading the following figures you might need one.

This is the highest inflation has been in over 40 years. During the financial crisis it spiked a couple of times to 5 per cent but quickly dropped again; during the early Nineties, in the period before the UK crashed out of the European exchange rate mechanism, it hit 8 per cent. The last time prices were rising quite this quickly was February 1982, when Rishi Sunak, the Chancellor, was still young enough to be wearing nappies. There’s a joke here somewhere, but I’m far too broke to find it.

The prices of plenty of other things are also merrily reaching for the skies, like S Club 7 with pound signs for eyes. House prices are increasing by nearly 10 per cent a year, which means there’s a decent chance your home currently earns more than you do. If you own, that probably won’t make any difference to your life; if you don’t, though, it’s just made your chances of buying recede yet further. Rents are rising by a more stately 2 per cent (though there is anecdotal evidence that plenty of landlords did not get the memo), and it’s still the fastest rise in over five years all the same.

All of which means that the government’s repeated calls that the general public show restraint when asking for pay rises feel just a little unrealistic. Prices really are going up which means that, all else being equal, living standards will get worse, possibly quite a lot worse. It is thus entirely rational that people try to get pay rises to prevent that. The implication that doing so amounts to a moral weakness is, at best, unhelpful.

After all, as the Financial Times’s Sarah O’Connor recently put it: “I don’t remember anyone telling my mobile provider to show ‘discipline and restraint’ when it told me the price was going up by CPI plus 3.9 per cent.” More than that, nobody is saying the same to landlords, or to pensioners, or to bankers. Pensioners are to be protected; ministers are breezily talking about removing the cap on bankers’ bonuses. Restraint for thee; bonanza for me.

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

That’s one issue with the government’s attempt to hold the line on inflation by leaning on pay. The other is: pay isn’t the problem. Past bouts of inflation may have been triggered by wage-price spirals, but real wages in Britain have pretty much stagnated for over a decade. Yet still we are in this mess, because of the war in Ukraine, or the energy price shock, or Brexit.

The government doesn’t know how to solve those problems, so it tells you to take yet another cut to your living standards instead. Well, it’s a strategy. Let’s see how it goes down in Wakefield and Tiverton, shall we?

[See also: How the living standards crisis is driving strike action]

Content from our partners
Inside the UK's enduring love for chocolate
Unlocking the potential of a national asset, St Pancras International
Time for Labour to turn the tide on children’s health

Topics in this article : , ,
Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com Our Thursday ideas newsletter, delving into philosophy, criticism, and intellectual history. The best way to sign up for The Salvo is via thesalvo.substack.com Stay up to date with NS events, subscription offers & updates. Weekly analysis of the shift to a new economy from the New Statesman's Spotlight on Policy team. The best way to sign up for The Green Transition is via spotlightonpolicy.substack.com
  • Administration / Office
  • Arts and Culture
  • Board Member
  • Business / Corporate Services
  • Client / Customer Services
  • Communications
  • Construction, Works, Engineering
  • Education, Curriculum and Teaching
  • Environment, Conservation and NRM
  • Facility / Grounds Management and Maintenance
  • Finance Management
  • Health - Medical and Nursing Management
  • HR, Training and Organisational Development
  • Information and Communications Technology
  • Information Services, Statistics, Records, Archives
  • Infrastructure Management - Transport, Utilities
  • Legal Officers and Practitioners
  • Librarians and Library Management
  • Management
  • Marketing
  • OH&S, Risk Management
  • Operations Management
  • Planning, Policy, Strategy
  • Printing, Design, Publishing, Web
  • Projects, Programs and Advisors
  • Property, Assets and Fleet Management
  • Public Relations and Media
  • Purchasing and Procurement
  • Quality Management
  • Science and Technical Research and Development
  • Security and Law Enforcement
  • Service Delivery
  • Sport and Recreation
  • Travel, Accommodation, Tourism
  • Wellbeing, Community / Social Services
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU