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Attack on living standards intensifies

Share and commodity prices are soaring as speculators endorse the global assault on living standards by corporations and governments.

Raising the VAT rate in Britain to 20% – its highest ever – comes as prices are rising out of control, further undermining the value of wages, salaries, pensions and benefits. The lower your income, the more badly affected you will be.

If the private sector employs any of the hundreds of thousands of workers now on their way out of public sector jobs it’ll be at much lower wages, with poorer working conditions and without pensions.

They’ll be in good company. Workers throughout the world are being forced to work harder for less money, whilst unemployment has soared, according to Wage Policies in Times of Crisis, a new report from the International Labour Organisation.

Since the crisis erupted in 2007 and 2009, the world’s 1.4 billion salaried workers have suffered a decline in wage growth – unlike the stratospheric bonuses enjoyed by traders on the global financial markets.

Across the world, real wage growth slowed from 2.2% in 2007 to 0.8% in 2008 and 0.7% in 2009. But real wages – taking inflation into account – actually fell in 12 of 28 industrialised countries in 2008 including Australia (-0.9%), Germany (-0.4%), Italy (-0.7%), Japan (-1.9%), Mexico (-2.6%), S. Korea (-1.5%) and the US (-1.0%).

In 2009, real wages fell further in Germany (-0.4%), Mexico (-5.0%), Japan (-1.9%), and S. Korea (-3.3%), whilst workers in France (-0.8%), the U.K (-0.5%), and Russia (-3.5%), also saw wages fall. Wage cuts hit workers in Hungary, Thailand, the Philippines, Malaysia, Jamaica, Botswana, Bahrain, the West Bank and Gaza. Among the worst affected were those in the Ukraine, where wages fell by 8%.

In the decades leading up to the crash, though wages increased, workers had to work far harder for their money, and received a declining share of the value they added. During the debt-fuelled growth of powerful global corporations from 1980, the share of value added by factory workers that came back to them in wages fell in most countries.

Wage growth lagged far behind productivity increases in most countries of the world, but particularly the industrialised countries. In the US, for example, between 2000 and 2009, labour productivity grew by 13%, whereas real average wages grew by only 2.2%. In Korea, whilst real wage growth was much stronger – at 18.3% between 2000 and 2009 – it was still way below the growth in labour productivity of 27.4%.

With the global economy in recession, the attacks on wages are certain to accelerate as corporations and governments pursue the cause of profit. Computer manufacturer Dell, for example, is moving operations inland in China in search of even cheaper labour.

Price rises are eroding wages even faster. In Britain, food costs have risen 5.5% over the past 12 months, outpacing the overall inflation rate of 3.3%. Wheat prices have just reached record levels, which is forecast to increase the price of a loaf of bread.

Unemployment is soaring, with the jobless total reaching 210 million worldwide, adding to the pressure on wages. The GMB union today forecast that 200,000 jobs would be culled between now and April as a result of cuts in local authority spending.

With many US states including California, the eighth largest economy in the world, joining much of Europe on the edge of a new financial meltdown, the prospects for a “return to growth” in the capitalist system look remote. What is certain, however, is that the exploitation of working people in every country will increase day by day.

Gerry Gold
Economics editor
5 January 2011

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Your Say

Tim says:

Yes. I agree, the coming year will be a continuation of the tradition of labour intensification, but at a much accelerated pace. This, whilst relegating increasing numbers of the population to a work-less life - at least as narrowly defined by the current economics. But the imperative is not just an economic and social one. I agree with Dylan, it is an ecological issue. This is what makes this 21st century crisis different from any other in history; the irretrievable destruction of the life support systems of the planet itself if things are allowed to continue business as usual.

Andrew says:

In an entirely globalised, deregulated capitalist economy, it is entirely predictable that companies will seek out countries where they can get their manufacturing and service provision done for minimum cost. The logical way for workers to seek to maintain their wages and living standards everywhere is by supporting workers in the lowest paid countries to raise their minimum wages:

Dylan says:

Very interesting. A ludicrous system. I want a system that gives people meaningful work, puts them first & offers a high standard of living.

It'll be interesting to see the public reaction to the VAT increase over the year, ever higher food prices, income tax going up, rip - off train fare rises year after year, whilst unemployment increases and wages lower or remain the same.

I pray for a year where the public start to take hold of their own destiny and shape their future towards a new system.

We are so close to runaway climate change, there is no time to lose.

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