Workers in Britain are suffering an ongoing and devastating decline in their living standards. Every week brings a fresh report highlighting falling wages, rising unemployment and worsening hardship.
Working class living standards have already regressed below where they were more than 30 years ago. According to a report by the New Policy Institute, the share of gross domestic product (GDP) going to wages has fallen from 58 percent in 1978 to 53.8 percent today. This represents a cumulative wage loss of £1.3 trillion, including £60 billion in 2011 alone. The wages-to-GDP ratio in 1978 already represented a sharp fall from the post-war high of 66.5 percent in 1975.
The wages of the poorest fifth of workers were 43 percent lower in real terms in 2011 than in 1978. Middle-income workers have seen their wages fall in value by 36 percent.
This regression has accelerated since the eruption of the financial crisis in 2008. Nearly 3 million people have been thrown out of work at some time or other since then—one person in every ten.
Those of the 2.7 million made redundant in the past four years who have managed to find new jobs are on average taking a staggering 28 percent wage cut. Many have not found work, and 30,000 more workers are losing their jobs each month. The cumulative official unemployment total is rising inexorably towards the 3 million mark. This figure includes over a million young people. Even so, it massively underestimates the real numbers without work or working only part-time.
Fully 270,000 public sector jobs were destroyed permanently last year as part of the £130 billion in cuts being imposed by the Conservative/Liberal Democrat coalition. Included in this total are 71,000 education workers and 31,000 from the National Health Service. The public sector workforce has declined to 5.94 million, accounting for 64 percent of jobs destroyed.
However, a third of job losses are in manufacturing. And the third year of a public sector pay freeze that has led to a 13 percent fall in real wages is matched by pay cuts across the private sector. The proportion of workers getting a pay rise has dropped from two thirds in 2008 to less than half in 2011, leaving the average worker £3,000 a year worse off.
This is worsened by inflation, which further slashes the actual spending power of workers. Fully 99 percent of pay deals are now below the official rate of inflation, leading to an additional 7 percent cut in real wages. With the cost of fuel and other necessities rising much more than headline inflation, a 20 percent fall in wage values is a more accurate figure. The average household would have to spend an additional £1,300 a year just to maintain the same living standard as a year ago.
Most people now live in permanent debt. More than 17 million people (35 percent of the population) have used an overdraft in the past 12 months, with over a quarter (27 percent) going into the red just 15 days after being paid. The typical UK household is spending £200 a month just to cover the interest on its loans, a quarter of disposable income. Average household mortgage debt has risen by more than £20,000 over the last 10 years and nearly a million people have taken out a cripplingly high interest payday loan to cover their rent or mortgage costs.
Already in 2010, the number of people in poverty was well in excess of 13 million, with almost half in “deep poverty.” The richest 10 percent of the population is now more than 100 times as wealthy as the poorest 10 percent, with the top 0.1 percent taking home as big a percentage of the national income as they did in the 1940s. If current trends continue, and they will more likely accelerate, by 2025 the top 0.1 percent alone will absorb 10 percent of national income. By 2030, the UK will have returned to levels of inequality not seen since the Victorian era.
These grim statistics are only part of the picture. The destruction of public sector jobs is bound up with the drive to finalise the dismantling of what is left of the welfare state, targeting in particular the privatization of education and the National Health Service (NHS)—the jewel in the crown of the post-war welfare state. The government plans for almost half of publicly funded hospital beds to be made available to the private sector, which is already taking over the running of entire NHS hospitals.
All of these attacks have proceeded unopposed by the trade unions. Instead, they have taken their place alongside their political allies in the Labour Party in the front ranks of those seeking to impose a social counterrevolution on the working class.
For well over three decades, the labour bureaucracy has presided over a constant undermining of the social position of the working class. Today, however, the steady drip of betrayals has opened the floodgates to an historic reversal that threatens tens of millions with a return to social barbarism.
There is nothing unique about Britain. The same or worse is taking place in Greece, Spain, Italy, Ireland and even Europe’s economic powerhouse, Germany. The United States differs only to the extent that its labour movement was always so rotten and corrupt that many of the things being taken from Europe’s workers, such as free health care, were never secured by American workers.
The most fundamental lessons must be drawn from these bitter experiences.
During the boom years that followed the Second World War, the Labour Party and the trade unions were able to secure significant social reforms and gains in wages and benefits. But this was always dependent on militant struggles waged by workers that forced them to act against their own desires. That is why wages reached a high in 1975, in the immediate aftermath of the mass strike movement that brought down the Conservative government of Edward Heath.
Those days are long past. Since then, there has been a forced march to the right by all the old parties of the “left” and the trade unions. Responding to the dictates of the global financial elite, the bureaucracy abandoned its previous strategies based on national economic regulation and class compromise in favour of untrammelled support for the market and the direct imposition of wage cuts and layoffs.
Thanks to the unions, strikes have become exceedingly rare. Those that do not end in betrayal are an extinct species.
Labour is a party no different to the Conservatives. The sole function of the unions today is to police their members and prevent the eruption of a social and political movement against capital.
This cannot continue unopposed. The deepest economic crisis since the 1930s is creating the conditions for an explosive new period of class struggle. It requires the building of new class struggle organisations, independent from and opposed to the old unions, and a new party to take forward the fight for socialism.