i Editor's Letter: Wages are on the rise (so long as you skew the figures)


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The Independent Online


“Where,” asks reader Martyn  Cooper of Stoke-on-Trent, “are these people getting the pay rises we’re hearing about?” After six years, wage rises have finally caught up and overtaken inflation, according to the Office for National Statistics, meaning that people’s purchasing power is improving.

Except that’s if you count bonus payments, which skew the figures.  The average household will scarcely notice the difference. Strip out bonuses, and wages rose by only 1.4  per cent, still slightly below the CPI  inflation of 1.6 per cent. Public sector workers are especially pinched  (0.9 per cent wage growth compared  with 2 per cent private) and will remain so for years. The wage stats also exclude the UK’s 4.5 million  self-employed (about a sixth of the workforce), some of whom have found the going especially treacherous since the 2008 financial crash.

Don’t worry if you had already uncorked the cava / opened the  celebratory can of Export and started spraying it round the living room. The economy is slowly improving. It wasn’t so long ago – November 2011 – that CPI inflation reached a record high of 5.2 per cent, most rampantly in energy bills, petrol and food.

But even those people set to benefit will need several more years to notice a big difference. Any Conservative who thinks that wage growth negates Ed Miliband’s “cost  of living” campaign needs to spend more time outside London. Here I’m thinking not of George Osborne,  who remains sober, but the employment minister Esther McVey, who got carried away yesterday talking about “how we’ve come out of the financial crash”. Insensitive.

In the past five years, real pay has dropped 10 per cent on average, according to Capital Economics, causing the most painful drop in living standards since the Second World War. We have recorded the impact around the country on these pages. Nevertheless, yesterday’s statistical landmark is welcome. Hope doesn’t put food on the table – but it matters.


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