Unions call for wage protection as inflation soars

The cost of living increased by 9.1% in the year to May, figures show.

Frances O’Grady, General Secretary of the TUC, said the Government was ‘spoiling for a fight’ with striking workers (Stefan Rousseau/PA) (PA Archive)

The country’s top trade union leader has said that ministers are “spoiling for a fight” with workers as inflation massively outstrips pay.

Trades Union Congress general secretary Frances O’Grady said that the Government should defend wages and give decent pay rises to public sector workers.

It comes as new inflation figures show that the cost of living increased by 9.1% in the year to May.

Transport workers across the country have gone out on strike because their pay is not worth what it was a year ago.

“With inflation rising twice as fast as average pay, we need a Government that will stand up for working people,” Ms O’Grady said.

“But instead, we have ministers spoiling for a fight with workers who take action to defend their living standards.”

The general secretary of union Unite, Sharon Graham, demanded that employers who can should give their workers pay rises.

“Wage restraint – absolutely not. It’s time for profit restraint.”

She added: “It’s not hard-pressed workers who are driving inflation, it’s whole swathes of corporate Britain who have lined their pockets.

“Runaway profits are driving the inflation that is threatening a national pay cut and yet the vast majority of politicians remain silent.”

Rebecca McDonald, chief economist at the Joseph Rowntree Foundation said that families would be worried now both food and energy prices are spiking.

The Government’s decision not to increase benefits at the same rate as inflation will squeeze those trying to put food on the table, she added.

“Instead of lurching from crisis response to crisis response, the Government needs to get on the front foot and address the fundamental inadequacy of our social security system,” she said.

“As a first step to ensuring that benefits actually support people in hard times, the Government must immediately stop deducting debt repayments from benefits at unaffordable rates.”

Households have been squeezed over the past year, in large part due to the soaring cost of energy.

The price of gas and oil started to tick up last summer, as demand for energy soared after the economy reopened from Covid-1 lockdowns.

But the price of energy does not just impact upon energy bills, factories and transport companies also need it to get goods to the end user. So if the price of energy soars, many other things will also become more expensive.

It has led the inflation rate to reach a level not seen in 40 years. The consumer prices index (CPI) hit 9.1% in May, and could rise to above 11% in October, according to Bank of England forecasts.

But James Lynch at Aegon Asset Management said there was at least some light at the end of the tunnel.

He pointed out that new data released on Wednesday showed that while headline inflation had risen, core inflation actually dropped from 6.2% to 5.9%.

“That is two months in a row that if you squint hard enough, we can see what almost seemed an exponential rise in prices starting to tail off,” he said.

Samuel Tombs, an expert at Pantheon Macroeconomics, said that there was some sign in Wednesday’s data that retailers were starting to accept that their margins will be lower.

He said that the prices of some products, like used cars, that had rocketed during the pandemic, are starting to “come back down to earth”.

Helen Dickinson, chief executive of the British Retail Consortium, said: “Fierce competition for market share means that retailers will continue try to absorb as much of these costs as possible and look for cost savings elsewhere.

“Retailers are working hard to do what they can to protect their customers from price rises, including by expanding value ranges, keeping the cost of essentials down and providing discounts for certain vulnerable groups.”