The latest wage data, shows what I have argued for more than a year. The Bank of England, and other pundits, who were basing themselves on the conditions of the last 40 years, in which large surplus populations of workers existed, to be drawn in, as and when, to meet the needs of basically slow growth, argued that, as inflation rose, created by their previous excess liquidity, workers would not be able to respond, real wages would fall, reducing aggregate demand, and so slowing the economy, whilst profits rose, enabling them, again, to cut interest rates, and goose asset prices.
That is what they were required to do, in order to protect the short-term interests of the global ruling class of speculators, which, owns its wealth in the form of fictitious-capital, and has come to depend upon paper capital gains on those assets, rather than the revenues provided by those assets. It shows the extreme level of contradiction already existing within the system, because, not only is further inflation of those assets impossible, as even negative interest rates showed, but the measures required to even try to achieve it, involve a deliberate damaging of real capital itself!
But, the early 2000's, showed that material conditions had changed. Globally, employment had doubled from the 1980's, making the working-class, for the first time, the largest class on the planet, replacing the peasantry, and petty-bourgeoisie. Most of that growth had been in developing economies in Asia, Latin America and Africa. But, as the new long-wave upswing began, in 1999, the effects became manifest. It saw global employment rise by 30%, in the first decade alone. In developed economies, too, workers began to flex their muscles. Interest rates rose, and the whole edifice, constructed over the previous forty years, based upon a delusional Ponzi Scheme of debt, as the other side of astronomical asset price inflation, came tumbling down with the 2008 global financial crisis.
But, despite all of that austerity, despite the growing protectionism of Trumpism and Brexitism, followed by the even more overt attempt to prevent economic expansion, via lockdowns, the underlying dynamic continued to drive forward, and the lifting of lockdowns simply saw the lid blown off, as I had predicted would happen. The slow erosion of the previous global labour surpluses, notable after 2000, accelerated with the lifting of lockdowns, with severe labour shortages arising in one sphere after another, forcing firms to compete with each other for labour, and to make sizeable increases in pay to do so, either in basic pay, or by using various bonuses, one-off payments and other incentives.
A year ago, the Bank of England said that workers would see the biggest fall in real wages on record, as inflation rose, an inflation, of course, they had created, as Andy Haldane, its former Chief Economist, has admitted. The rise in European energy prices, caused by the, NATO inspired, boycotts and sanctions against Russian gas and energy, added to that, as it drained household spending from other forms of consumption. The intention was to slow rapidly expanding economies once more, so as to reduce the demand for labour and capital that was causing interest rates to rise, and so, again, threatening to crash asset prices, and so the basis of the wealth and power of the global ruling class.
But, workers, instead, responded to the rising cost of living, leaving governments to have to try to head it off. Having caused energy prices to rise by their policy of sanctions etc., they now had to try to counter it, rather than see workers permanently raise their wages, at the cost of profits, by, instead, introducing various packages to subsidise household energy bills, so, again, causing a huge expansion of government debt. The higher energy costs for industry, did have one of its intended consequences, in Europe, in that it slowed economic growth, particularly in Germany.
But, it hasn't caused the recession that many were predicting, and which the speculators wanted, so as to discipline workers, and so cut wages, and reduce the demand for labour and capital. The continued demand for labour and capital meant that wages continued to rise, and so have interest rates. The latest wage data for the UK shows that wages are rising faster than prices. Regular pay, rose by 7.8% year on year, compared to 6.8%, year on year for consumer prices. But, a further look at the data shows where the real problems for Blue Labour also lie. The 7.8% figure belies the fact that wages, for workers in the state sector, have continued to lag those in the non-state sector, despite large waves of strikes, in the former, forced on workers, as the state has used its muscle to try to hold down the wages of state employees, as the spearhead of its attempts to slow the economy, and reduce all wages.
The biggest rise in wages came in the finance and business services sector, with a 9.5% rise, followed by manufacturing, with an 8.1% rise. Many of these rises, unlike for workers in the state sector, where pay rises have been much lower, have been achieved without the need for industrial action. The average pay rise for workers simply switching jobs, remains at around 14%, and its easy to see why many state employees will simply move to higher paid jobs in the non-state sector, which will further exacerbate the collapse of state provision. Moreover, these rises in basic pay do not account for the continued use by firms of other payments to boost wages, so as to attract or retain workers. Wages including bonuses rose by 8.5% year on year.
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