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Choices in the low-wage economy. Photo: Wikipedia

Choices in the low-wage economy. Photo: Wikipedia

Lindsey German argues that austerity as a deliberate choice is holding down wages, not the prospect of Brexit 

The report that wages in Britain will fall till 2020-21 should be looked at carefully. It comes from the Institute for Fiscal Studies, whose director Paul Johnson has called it extraordinary and dreadful. He is right. But this is not a new process. Taking 2007-08 as a benchmark, wages have fallen pretty much consistently until 2014. In March, they were projected to recover to 2008 levels by 2019-20. Now, post-Brexit they are projected to be stuck at 98% of 2008 levels.

The amazing thing is that this parlous state of affairs is being attributed to Brexit. We have now had 8 years of wages being lower than they were before the financial crisis. This had nothing to do with any referendum or indeed membership or otherwise of the European Union. It was a deliberate policy of holding down wages and then imposing austerity carried out by successive governments.

Public sector wages have been especially hard hit. University lecturers have seen their wages fall in real terms for the best part of a decade. Job losses in the public sector have not been matched by real wage increases for those still in work, as has often been the case previously. 

Both private and public sector wages have been driven down by a race to the bottom, where the minimum wage has become the standard payment in many occupations. Contracting out, bogus self-employment, casualisation and privatisation have all helped reduce wages across the board. There is a problem with productivity in Britain but this has to do with a lack of investment across many industries, not with any failure to work hard. The low-wage economy feeds into this, with employers preferring to hire low-paid workers rather than invest in machinery that can improve productivity. 

Levels of inequality are at record, and the share of wealth going to working people gets ever smaller. Let's blame this on what causes it - the capitalist system which is driving down wages and conditions for millions. 

There is no reason why wages have been falling or need to fall after Brexit - it is a political decision. Universities are making lots of money from fees, which they are spending on new buildings, prestige projects and vice chancellors' salaries, rather than on their staff. The NHS pays millions to privateers and agencies, while its nurses and doctors are overworked and underpaid. This is happening across the board.

It's time for a decent minimum wage of £10, controls of rents and more housebuilding, an end to precarity and zero-hours contracts, a programme of investment for public services and green jobs.

Lindsey German

Lindsey German

As national convenor of the Stop the War Coalition, Lindsey was a key organiser of the largest demonstration, and one of the largest mass movements, in British history.

Her books include ‘Material Girls: Women, Men and Work’, ‘Sex, Class and Socialism’, ‘A People’s History of London’ (with John Rees) and ‘How a Century of War Changed the Lives of Women’.

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