Britain\’s workers have suffered more financial pain since 2008 than in any five-year period of the modern age, according to research by a leading tax thinktank that shows employees have sacrificed pay to keep their jobs.
Describing this downturn as the longest and deepest slump in a century, the Institute for Fiscal Studies says workers have suffered unprecedented pay cuts of 6% in real terms over the last five years.
Historically, real wages rise by about 2% a year. This suggests that people are more than 15% worse off than they would have been if the pre-crisis wage trends had continued.
Worth recalling how Germany got itself into the sweet spot it\’s currently in. Back around 1999, 2000, wages were too high in relation to the production coming from those being paid. Productivity was too low in short. So, the German government engineered a relative fall in the workers\’ wages. As productivity continued to rise wages did not thus reducing the labour cost of production.
Et voila. After a decade of doing this German industry is now extremely competitive.
And there are those who have insisted that British industry faces much the same problem. Wages are simply too high compared to the output from employing people. Thus the wages need to fall relative to output. All of which seems to be happening and Hurrah!
But what we really ought to note here is the difference between the German unions/lefties and their British counterparts. The Krauts, when faced with this problem, said, hmm, you\’re right you know. We really had better restrain wages for the next few years. Can anyone at all, anyone not going through drug induced hallucinations, imagine the British unions and or left agreeing a similar plan?
No, I didn\’t think so either. My conclusion from which being that while that German style, that cooperation that the TUC continually calls for, might work in Germany it don\’t over here. Because TUC.