British workers facing soaring costs of living in 2022 need a bigger pay rise after a “lost decade” of wage growth under Conservative-led governments, the head of the Trades Union Congress has said.
In her new year’s message, Frances O’Grady urged ministers to take immediate steps to encourage faster pay growth across the British economy amid soaring energy bills and other costs.
Issuing a challenge to Boris Johnson, she said his government could not “sit this wages crisis out” after cutting benefits and announcing plans for a tax raid on workers next year.
“After decades of real wage cuts and falling living standards, no one can seriously say working people don’t deserve a pay rise,” she said.
“That’s my priority, and the priority of the whole union movement, in 2022. The prime minister should shape up and make it his priority too.”
O’Grady’s message comes as pressure mounts on the government over living costs and the highest inflation rate in a decade, amid warnings that the Tories’ tax and spending plans will further damage living standards.
The Resolution Foundation said on Wednesday that 2022 was set to be “the year of the squeeze” as households faced a £1,200 hit to their incomes from stalling wages, higher tax, and rising energy bills.
Highlighting the financial stress on working families, O’Grady said successive Tory-led governments had failed to get wages rising for the past 11 years.
“We are still in the longest period of pay stagnation since the Napoleonic wars. Real wages for millions are less than they were before the bankers’ crisis in 2008,” she said.
Analysis by the TUC showed that workers would be £500 a year better off if real wages grew at pre-financial crisis rates between now and 2026. However, it warned inflation-adjusted pay was on track to rise by just £150 a year instead.
It found that if real pay growth seen before the 2008 crash had been maintained, workers would have been about £8,000 better off today in real terms.
O’Grady said ministers needed to work with unions to develop a “long-term economic plan”, including the use of fair pay agreements, whereby the government brings together worker and employer representatives to set minimum pay, terms and conditions for particular sectors.
“Fair pay agreements work all over the world. And they could work here too. They are a sensible, modern solution to the problems of staff shortages, low skills, and low pay. And they will stop a race to the bottom on pay and conditions,” she said.
O’Grady said other measures were also required, including an immediate increase in the national living wage to £10 an hour, a ban on zero-hours contracts, outlawing fire and rehire tactics, and ending outsourcing. The current national living wage of £8.91 an hour will increase to £9.50 from April.
She added: “If I have one message for this government at the start of 2022, it is this: Britain needs a pay rise.”