Millions Face A Fall In Their Standard Of Living

[AvidFan]

http://www.telegraph.co.uk/finance/7888729/Millions-face-four-year-fall-in-standard-of-living.html

Millions face four-year fall in standard of living

Millions of workers will suffer effective pay cuts and a fall in their standard of living for the next four years, an economist from the Treasury’s independent forecaster has warned.

By Philip Aldrick, Economics Editor

Published: 11:00PM BST 13 Jul 2010

Millions face a four-year fall in the standard of living. Photo: GETTY IMAGES Geoff Dicks, one of the three members of the Office for Budget Responsibility (OBR), told MPs yesterday that the UK will experience “falling real wages” as pay rises fail to keep pace with inflation.

Public sector workers have already had their pay frozen for the next two years, while many private sector workers have had to accept similar deals or part time work in order to preserve their jobs.

But figures from the OBR show that the rise in the cost of living will outstrip wage rises for some years to come.

According to its official forecasts, average earnings will rise 2.1pc this year, 1.9pc next year and 2.3pc in 2012. In that time, the Retail Price Index (RPI), traditionally used as the inflation benchmark for wage settlements as it includes housing costs, is predicted to rise 3.7pc, 3.2pc and 3.2pc.

“Our labour market works pretty well,” Mr Dicks told MPs on the Treasury Select Committee yesterday. “As evidence for that I would cite the freezes and cuts in private sector pay as people price themselves into work or accept lower pay so they are not priced out of work in a recession.

“We think the labour market will continue to do that. We’ve got falling real wages for the next three years, earnings rising less than CPI (the Consumer Price Index which does not include mortgages) and rather less, I think, than RPI for the next four years.”

Workers have already taken a real-terms pay cut in 2009, when average earnings rose 1pc against CPI inflation of 2.1pc.

Mr Dicks’ warning came as the Office for National Statistics released official inflation figures for June. CPI fell from 3.4pc to 3.2pc over the month due to falling petrol prices, but remains far above the Bank of England’s 2pc target. RPI is higher still, at 5pc after a 0.1 percentage point fall over the month.

Both measures of inflation exceed the most recent statistics on pay rises. According to Incomes Data Services, wages rose at an annual average rate of 2pc in the three months to the end of May, as one in ten private sector pay settlements resulted in a freeze in the past three months and two in five in the public sector.

John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said: “The squeeze in real income on households this year will probably be the worst. People will really notice it this year as RPI is running at round 5pc so it’ll make those small pay rises feel like a bigger squeeze.”

Mr Dicks was using Britain’s flexible labour market to defend the OBR’s forecasts for employment to grow by 1.08m to 30m over the next four years, despite slashing 600,000 public sector jobs.

“One statistic that really impresses me is that job losses in this recession from peak to trough were 740,000,” he noted. “In the recession of the 1990s, it was an extra million. In the 1980s, an extra million.”

Workers have been kept in jobs as many companies managed through the recession by cutting and freezing wages, or moving staff to shorter hours.

However, Mr Philpott cautioned that as staff return to full time work they are likely to be asked to work harder.

“Employers will work those people harder during initial phase of recovery, to reduce unit labout costs,” he said. “We’re starting to see some of that already.”

During his evidence to the committee, Mr Dicks also conceded that the austerity measures included in George Osborne’s Emergency Budget last month had made a double-dip recession more likely. “Logically, the chances of that have increased,” he said. “Some measures will have reduced demand.”

However, the Organisation for Economic Cooperation and Development yesterday applauded the Government for its “courageous and appropriate” Budget.

Mr Osborne has staked his reputation and the country’s economic prospects on cutting the £770bn national debt and eradicating the £155bn deficit, by reining in public spending and stimulating private sector growth.

Yesterday’s inflation figures were put down to record price cutting in Summer sales on the high street and falling petrol prices.

CPI dropped from 3.4 per cent to 3.2 per cent in June, according to the ONS, the lowest level since December.

Clothing and footwear prices fell by 2.1 per cent - the biggest reduction seen in June since the ONS began collecting monthly figures 14 years ago.

Petrol prices fell by an average 2.6p a litre to 117.9p - in contrast with a 4.4p hike a year earlier - dragging down the rate of inflation.

The ONS said clothing sales were more widespread this year, particularly for categories such as womenswear.

Offsetting this were other factors such as the soaring cost of air fares - ticket prices to South Africa doubled for the World Cup – as well as higher insurance premiums.

[Snugglybear]

Workers have been kept in jobs as many companies managed through the recession by cutting and freezing wages, or moving staff to shorter hours.

and

“Employers will work those people harder during initial phase of recovery, to reduce unit labout costs,” he said. “We’re starting to see some of that already.”

So those employers won't be hiring people into new jobs.

[Timak]

So those employers won't be hiring people into new jobs.

Hey why pay people for a 37 hour week when you can pay them for 30 hours but work them for 37.

[miko]

Hey why pay people for a 37 hour week when you can pay them for 30 hours but work them for 37.

Exactly this kind of thing is now a big problem. It is not confined to small struggling companies, large rich companies have jumped on the band wagon of getting work done for free.

[Timak]

Exactly this kind of thing is now a big problem. It is not confined to small struggling companies, large rich companies have jumped on the band wagon of getting work done for free.

Add in "internships" and "work experience" and you've got even more money going to the shareholding / corporate class from the efforts of the poor. Yet every right wing talking point is about scrounging parasites with no work ethic.

And that is another thing that gets me, work ethic.

I used to work for a 3 person company, if we needed to test 100 pieces of equipment before shipping them I'd happily do that so we'd make the deadline even if it meant working through lunch or staying late. However it would be an exception, I was paid for 37 hours a week, 48 weeks of the year and that is what I'd do, this has always been my attitude, probably why I'm now self-employed!

I've got friends who routinely work an extra hour or two every day, they work for big companies who make hundreds of millions, and say that if they leave on time they are basically accused of slacking. It strikes me as weird that people are now so frightened to stand up to their bosses that they can't say "hang on our shareholders and the CEO are raking it in on the fact that we collectively work an extra 10 hours a week each unpaid - either reward us or employ more staff"

[Austin Allegro]

Add in "internships" and "work experience" and you've got even more money going to the shareholding / corporate class from the efforts of the poor. Yet every right wing talking point is about scrounging parasites with no work ethic.

And that is another thing that gets me, work ethic.

I used to work for a 3 person company, if we needed to test 100 pieces of equipment before shipping them I'd happily do that so we'd make the deadline even if it meant working through lunch or staying late. However it would be an exception, I was paid for 37 hours a week, 48 weeks of the year and that is what I'd do, this has always been my attitude, probably why I'm now self-employed!

I've got friends who routinely work an extra hour or two every day, they work for big companies who make hundreds of millions, and say that if they leave on time they are basically accused of slacking. It strikes me as weird that people are now so frightened to stand up to their bosses that they can't say "hang on our shareholders and the CEO are raking it in on the fact that we collectively work an extra 10 hours a week each unpaid - either reward us or employ more staff"

I've never understood that either. If they found in their pay slip that they had been paid only half their salary, they would surely have a go at the boss (apparently in the City it was derigeur to feign anger at your bonus, whatever its size). So why do they think it is acceptable to work extra hours for free?

[Mega]

Hey F*ck them!

Mike

[Riedquat]

Add in "internships" and "work experience" and you've got even more money going to the shareholding / corporate class from the efforts of the poor. Yet every right wing talking point is about scrounging parasites with no work ethic.

And that is another thing that gets me, work ethic.

I used to work for a 3 person company, if we needed to test 100 pieces of equipment before shipping them I'd happily do that so we'd make the deadline even if it meant working through lunch or staying late. However it would be an exception, I was paid for 37 hours a week, 48 weeks of the year and that is what I'd do, this has always been my attitude, probably why I'm now self-employed!

I've got friends who routinely work an extra hour or two every day, they work for big companies who make hundreds of millions, and say that if they leave on time they are basically accused of slacking. It strikes me as weird that people are now so frightened to stand up to their bosses that they can't say "hang on our shareholders and the CEO are raking it in on the fact that we collectively work an extra 10 hours a week each unpaid - either reward us or employ more staff"

Completely agree with you there. Fortunately I work somewhere where that doesn't seem to happen - I'll very occasionally do extra if a lot needs doing quickly but it's by no means routine. I suppose people put up with it because they've no choice a lot of the time - it's hard finding a job where they treat you properly and you need a job. Complain about it too much and you're out. This will no doubt annoy the right-wingers on here but this sort of thing is precisely what unions are supposed to be for, and why some form of union is needed. However, there's a bigger problem, and that's that all too many people in this situation don't even regard it as a problem and seem to agree with the "If you only do what you're paid to do then you're a slacker" attitude.

[Executive Sadman]

TRANSLATION

No more range rover sports, hot tubs, and foreign holidays

ie

No less hefty fuel bills, water bills, and Skin cancer/sunburn.

Sounds good to me. Unlesss you quantify living standards as the amount of 'bling' applied to everything i dont think living standards have improved in 20 years.

[SarahBell]

TRANSLATION

No more range rover sports, hot tubs, and foreign holidays

ie

No less hefty fuel bills, water bills, and Skin cancer/sunburn.

Sounds good to me. Unlesss you quantify living standards as the amount of 'bling' applied to everything i dont think living standards have improved in 20 years.

Compare now to "Open all hours"

No new cars, no shiny tat, no new clothes...

[miko]

I've got friends who routinely work an extra hour or two every day, they work for big companies who make hundreds of millions, and say that if they leave on time they are basically accused of slacking. It strikes me as weird that people are now so frightened to stand up to their bosses that they can't say "hang on our shareholders and the CEO are raking it in on the fact that we collectively work an extra 10 hours a week each unpaid - either reward us or employ more staff"

Yes it is widespread,

So in effect the tax payer is picking up the bill for the free work that these companies are getting , they are not employing more people so the people stay on the dole and get accused of being benefit scroungers .

My niece workes for a big corporate , anyone there that works nine to five is classed as part time they are expected to work longer hours. She hates going home late so get's in everyday at 8 instead of nine but leaves on time at five.

Her boss accused her of being a clock watcher as she always left at five , she explained that she always get's in at eight not nine , and he pretended that he did not know that. For every seven people in her firm there is another person that should be there but they are not they are on the dole and they get the flack for being scroungers . It should be the companies that get the finger pointed at them not those that can not get the jobs . The jobs that have been forced on current workers at no extra pay.

[Riedquat]

Her boss accused her of being a clock watcher as she always left at five

My response would be "So?" Not to mention suggestions of hypocrisy for even noticing it.

[miko]

My response would be "So?" Not to mention suggestions of hypocrisy for even noticing it.

Yes well masses of people are not in the position to be able to respond like that . The employers know that and are taking advantage. People should not be put in the position in the first palce but they are.

We need MP's that are using tax payers money to fund these freebies that the companies are getting to do something about it, but what do we get MP's like Ian Duncan Smith saying they will make it eaiser for people to move for work . They should be looking at the real problems of unemployment and reasons. Free work by x amount of people is keeping others unemployed , the companies make extra profit and the tax payer picks up the bill.

[Aries]

Turning everyone who works into a slave is the only way to lock in the recovery. I always get twitchy when I hear I'm going to have to get used to a poorer standard of living. Its already very modest, don't earn much but I live within my means and try to end the month with a bit more cash than I started it with. It seems those of us who are sensible must be punished for our wreckless lack of massive debt.

People in full-time employment are working longer hours unpaid - so, fewer jobs available.

More people can only find part-time work.

Wages are being frozen, or forced down by competition for the diminishing number of jobs on offer.

Most families need two wage packets to survive.

Imports, out-sourcing and automation are increasingly displacing even moderately skilled workers.

Even if we don't go into a double-dip recession, a "jobless recovery" is anticipated.

Yet orthodox economics states that production automatically distributes enough purchasing power in wage packets and salaries for the population to buy all the goods and services offered for sale. It even expects them to have enough disposable income left over to create the nation's entire non-cash means of exchange (97% of the total) by borrowing it into existence in the form of loans from the banks (in particular, mortgages), at their own risk and expense!

We were told in the 50s and 60s that automation would lead to an age of leisure. Now, instead, two people must be employed to provide for a family instead of one (ie, twice the number of hours must be worked for pay per family unit).

If goods can now be produced with minimal human labour, why shouldn't we all benefit? More time to fill as we choose doesn't imply idleness. It means we'd be free to do the many useful and satisfying things which are currently being neglected - eg, spend more time with our families, maintain our homes and gardens, study and learn new skills or follow up hobbies, do voluntary work ... Most people could employ themselves far more profitably, in non-financial terms at least, outside the "workplace", which has frequently been created by government not because it answers a useful purpose, but to keep the unemployment figures as low as possible.

The present system doesn't work, and with each technological advance it becomes even more inefficient. An alternative way of creating and distributing purchasing power, without forcing anybody into debt, is proposed by The Bank of England (Creation of Currency) Bill 2010. If enacted, the Bill would "make the 'inevitable' cuts in public services completely unnecessary, reduce the tax burden by up to 30% and allow us to clear the national debt". It would make all this possible by taking "control of the UK's money supply out of the hands of the commercial banking sector" restoring it to the state, where it can be used to benefit the economy, rather than providing a £200 billion annual subsidy to the commercial banks.

You can read the Bill, with explanatory notes and FAQs, here: http://www.bankofenglandact.co.uk/.

[timmyab]

My response would be "So?" Not to mention suggestions of hypocrisy for even noticing it.

Yeah, try leaving five minutes early if you want to know who the real clockwatchers are.

[Timak]

Another anecdote - when I worked for this small company the boss and I went to a sales demonstration in London. I was in work at 8am, we left about 2pm to drive the 2 hours down there and did the demo between 6pm-10pm. I got home at 1am and was in work again for 8am the next day. So effecively I had worked an entire additional day for no extra pay (or even thanks)

About a week later I got a grilling over my abuse of company e-mail facilities - apparently the boss had been "looking for a file" in my sent items inbox and noticed about 10 messages between me and a friend in the course of a few days.

Each e-mail was about a sentence long and probably took 20 seconds to write. I was asked to justify my actions, I offered to resign there and then saying if I was expected to work through my lunch time every day and do sales conferences in my own free time then I wasn't sure it was going to work out. I also pointed out that I never text or take personal calls at work and that I didn't feel sending the odd personal e-mail was a problem unless it was instead of working. He quickly backed down (when I checked his e-mail he had been liasing with an HR consultant who told him I had a point)

Spent about another 6 months there before finally quitting after a series of increasingly paranoid actions by the man (going through my desk drawers, breaking promises on share schemes)

[Greg Bowman]

Yes well masses of people are not in the position to be able to respond like that . The employers know that and are taking advantage. People should not be put in the position in the first palce but they are.

We need MP's that are using tax payers money to fund these freebies that the companies are getting to do something about it, but what do we get MP's like Ian Duncan Smith saying they will make it eaiser for people to move for work . They should be looking at the real problems of unemployment and reasons. Free work by x amount of people is keeping others unemployed , the companies make extra profit and the tax payer picks up the bill.

For every hard done by worker who works a full 40 hours but leaves at five there is a worker who thinks an hour lunch break means an hour and half, it is ok to take Monday off every so often etc.

Most mid sized companies make 3-5% at the botom line hell even Tesco's does so not not sure where all that extra profit is.

I have stated my mantra many times on here - most people have a choice and that choice is generally exercised as moan about the boss to keep a steady wage coming in but do nothing about it.

There a few people who don't have a realistic choice (perhaps single parent, disabled and found a reasonable employer) I have every sympathy for them.

They are rare though.

Edited July 14, 2010 by Greg Bowman

[Greg Bowman]

Another anecdote - when I worked for this small company the boss and I went to a sales demonstration in London. I was in work at 8am, we left about 2pm to drive the 2 hours down there and did the demo between 6pm-10pm. I got home at 1am and was in work again for 8am the next day. So effecively I had worked an entire additional day for no extra pay (or even thanks)

About a week later I got a grilling over my abuse of company e-mail facilities - apparently the boss had been "looking for a file" in my sent items inbox and noticed about 10 messages between me and a friend in the course of a few days.

Each e-mail was about a sentence long and probably took 20 seconds to write. I was asked to justify my actions, I offered to resign there and then saying if I was expected to work through my lunch time every day and do sales conferences in my own free time then I wasn't sure it was going to work out. I also pointed out that I never text or take personal calls at work and that I didn't feel sending the odd personal e-mail was a problem unless it was instead of working. He quickly backed down (when I checked his e-mail he had been liasing with an HR consultant who told him I had a point)

Spent about another 6 months there before finally quitting after a series of increasingly paranoid actions by the man (going through my desk drawers, breaking promises on share schemes)

Why six months... the guy was obviously a T*******

[quine]

Yes it is widespread,

My niece workes for a big corporate , anyone there that works nine to five is classed as part time they are expected to work longer hours. She hates going home late so get's in everyday at 8 instead of nine but leaves on time at five.

Her boss accused her of being a clock watcher as she always left at five , she explained that she always get's in at eight not nine , and he pretended that he did not know that.

That's the thing isn't it - you can go in to work an hour early but if you dare leave 5 to 5 to beat the rush hour then you are a skiver!

I remember taking over a job from a super efficient girl who was promoted. During the handover period I discovered that she worked through her lunch hours and also took work home. I was horrified - anyone taking over from someone like that is going to look a failure !

[miko]

I have stated my mantra many times on here - most people have a choice and that choice is generally exercised as moan about the boss to keep a steady wage coming in but do nothing about it.

There a few people who don't have a realistic choice (perhaps single parent, disabled and found a reasonable employer) I have every sympathy for them.

They are rare though.

Choice

Where is the choice for those unable to get a job as the job that was there is not there now as it has been shared out among the other workers in a company.

Don't know where you get your bottom lines of 3/5% this is going on in massive corporations who can but will not employ more people .

Will state my mantra on this one again , the tax payer is picking up the bill for the free work that the companies are getting via their existing employees working for free. Keeping others on the dole.

[Tonkers]

Yeah, try leaving five minutes early if you want to know who the real clockwatchers are.

Funnily enough I find the 'ever presentees' and their pretend overtime are the least productive. It's just the system, they know hard work is not rewarded...

My standard of living is vastly improved by working from home and not under set 9 to 5 hours, I am happier, healthier and more productive. It is cheaper. It is easier to get ahead by your actions and meeting your targets and not your office politics. I am part of my local community. I made it clear when interviewing for my new job that I wanted flexibility, mobility and working from home. The new boss liked that, he is progressive. I showed him a picture of me in meadow emailing a business contact.

Mind you, he has nice office and I will be happy being there a few days a week.

Speaking to friends, and particularly ones who have got off the leash, it now seems antiquated the way the workplace is now.

I can take my laptop and work in a cafe, where I can also meet clients in a neutral environment (I find this improves meetings).

Of course, there are many jobs that require your presence at set times, but for those that don't, it just seems silly.

Amusingly, my old boss approved me working from home, then emailed me a few weeks in and said, I am fine with you working from home, but I never see you. This guy was the worst though, sat in the windowless office 9 to 5 playing solitaire. That is not a fine standard of living.

[tomwatkins]

People in full-time employment are working longer hours unpaid - so, fewer jobs available.

More people can only find part-time work.

Wages are being frozen, or forced down by competition for the diminishing number of jobs on offer.

Most families need two wage packets to survive.

Imports, out-sourcing and automation are increasingly displacing even moderately skilled workers.

Even if we don't go into a double-dip recession, a "jobless recovery" is anticipated.

Yet orthodox economics states that production automatically distributes enough purchasing power in wage packets and salaries for the population to buy all the goods and services offered for sale. It even expects them to have enough disposable income left over to create the nation's entire non-cash means of exchange (97% of the total) by borrowing it into existence in the form of loans from the banks (in particular, mortgages), at their own risk and expense!

We were told in the 50s and 60s that automation would lead to an age of leisure. Now, instead, two people must be employed to provide for a family instead of one (ie, twice the number of hours must be worked for pay per family unit).

If goods can now be produced with minimal human labour, why shouldn't we all benefit? More time to fill as we choose doesn't imply idleness. It means we'd be free to do the many useful and satisfying things which are currently being neglected - eg, spend more time with our families, maintain our homes and gardens, study and learn new skills or follow up hobbies, do voluntary work ... Most people could employ themselves far more profitably, in non-financial terms at least, outside the "workplace", which has frequently been created by government not because it answers a useful purpose, but to keep the unemployment figures as low as possible.

The present system doesn't work, and with each technological advance it becomes even more inefficient. An alternative way of creating and distributing purchasing power, without forcing anybody into debt, is proposed by The Bank of England (Creation of Currency) Bill 2010. If enacted, the Bill would "make the 'inevitable' cuts in public services completely unnecessary, reduce the tax burden by up to 30% and allow us to clear the national debt". It would make all this possible by taking "control of the UK's money supply out of the hands of the commercial banking sector" restoring it to the state, where it can be used to benefit the economy, rather than providing a £200 billion annual subsidy to the commercial banks.

You can read the Bill, with explanatory notes and FAQs, here: http://www.bankofenglandact.co.uk/.

What's your definition of "survive?". I have become a minimalist. I have one pair of black shoes, one pair of brown as an instance. I find I eat healthier.

[zilly]

Easy answer - lift share.

Then you have to arrive/leave on time and no-one can really criticise you as you're doing your bit for the planet and for congestion.

It amazes me how much resistance the average Brit worker has to sharing their car with someone else.

Endless queues of cars each morning and evening with one person in them.

Full no doubt of people cursing the traffic but still unwilling to share a lift with someone who lives near them or on their route into work.

I find it staggering.

[macca]

Why the upset or surprise? The message that comes across loud and clear on this site is that unions are a hangover of the 70's and are not helping the economic situation. Well, whats it to be, a realisation that its gone too far in favour of the corporation or acceptance that more people need to join unions and help fight against work slavery? The way things are going it will only get worse, perhaps much worse so I think people need to either embrace capitalism for what it has become with the view that if you can't beat it join it or fight against it. It is my personal belief that public sector would have gone the way of private sector decades ago if it wasn't for unions and although their demands may seem unrealistic at times, they aren't necessarily dealing with realistic or fair demands from employers as we are currently seeing.

If its every man for himself then we have to accept jobs for what they are, which is a short term stepping stone to somewhere, where some win and some lose and if that doesn't work then maybe become more enterprising yourself or accept that you will become a willing slave. This is the price of progress it seems, I guess no one is owed a living in this world.

[miko]

That's the thing isn't it - you can go in to work an hour early but if you dare leave 5 to 5 to beat the rush hour then you are a skiver!

I remember taking over a job from a super efficient girl who was promoted. During the handover period I discovered that she worked through her lunch hours and also took work home. I was horrified - anyone taking over from someone like that is going to look a failure !

Yes and people like this woman you took over from play into the hands of the bosses , if she can do it why carn't anyone else ?