Inflation Report 2009: why inflation is a class issue (free download) shows how in the past year inflation has disproportionately hit the poorest hardest.
The report, commissioned by the Trade Union Co-ordinating Group (TUCG) of eight trade unions, also argues that trades unions must fight for above inflation pay increases, especially for the lowest paid workers who have been hit hardest by inflation - as it is essential goods (which cost the poorest a higher proportion of their expenditure) that have had the highest rate of inflation in the last year.
The paper also proposes a new inflation measure: 'Essential Inflation', based on the inflation rate for the essential items that people are unable to cut back on.
Bob Crow, RMT General Secretary, said:
"It is clear from this important piece of research that the working class have taken by far and away the biggest hit in this recession.
"While pundits talk about falls in inflation, out there in the real world it's a day to day struggle for people to make ends meet as the cost of essentials continues to rise.
"Meanwhile, it's bonus time again in the casinos of the City of London. Those who got us into this mess have come out smiling while the workers who really make the economy tick have been hammered.
"RMT fights day after day against exactly this kind of injustice."
John McDonnell MP, TUCG Parliamentary Convenor, said:
"This paper demonstrates who has been hardest hit by the recession - and it's the lowest paid.
"This evidence will now shape trade unions' strategy in coming pay negotiations. Trade unions cannot be expected to stand back and allow the living standards of their members to be eroded when they've witnessed the return of the bankers' bonus culture."
Mark Serwotka, PCS General Secretary, said:
"Low paid workers in both the private and public sector are bearing the brunt of the recession. Hundreds of thousands of civil and public servants have experienced pay freezes leading to their pay being cut in real terms.
"PCS members who keep this country running know the true cost of inflation with 40% of staff who are helping people deal with recession getting no pay rise at all last year. This report lays bare the fact that it is the poorest in society who are hit by essential inflation."
The report's conclusions are:
- In current pay negotiations, where pay freezes are being proposed across organisations (e.g. British Airways) it is important to understand that a pay freeze is a real terms cut of nearly 2% in living standards for the poor, but a real terms increase for the richest. Unions are therefore correct to argue that low paid workers should not be treated the same in pay negotiations as senior management grades (even ignoring arguments about reducing existing pay differentials).
- It also means that unions representing the lowest paid workers should be calling for pay increases of at least 2% just to maintain living standards.
- Government must ensure that in areas it regulates – many of which are covered in the Essential Inflation measure – that rises are kept down so as not to disproportionately affect the poorest.
- The Government must also ask the Low Pay Commission to reconsider its recommendations that the National Minimum Wage (NMW) rates rise by only 1.1% in October 2009 – less than the rate of inflation for the second consecutive year. This would represent a decline in relative living standards for low paid workers, if there pay is increased only in line with the NMW uprating. Likewise upratings to social security benefits and the basic state pension this year must also be more generous.