The leader of the Trade Union Congress (TUC) has called for the Bank of England to pay due heed to the financial security of the worker on average pay when considering a base rate hike, suggesting that before this group of people has been positively influenced by the economyís recovery, interest rates ought to be held at their present level.
Frances OíGrady, TUC general secretary, revealed she had lobbied BoE governor, Mark Carney, at a recent meeting impressing upon him the need for the BoE to address the issue of stagnating real wages and particularly how this impacts upon the layman.
The TUC has taken issue with the perceived stage of economic growth the UK is currently enjoying without recognising that it rests on potentially skewed unemployment data. Although unemployment levels are falling ñ generally an indicator of when to raise interest rates ñ sceptics have questioned how great the new proportion of our countryís workforce are comprised of low-income, self-employed individuals.
Speaking candidly, it would appear our expansion into economic growth rests on a foundation of poorly paid permanent jobs, a contentious relationship between pay freezes & bonuses and exponentially increasing numbers of self-employed individuals. As such, Ms. OíGrady has requested the Bank reflect not only on the overall economyís health, but on how the average worker is affected by the UKís recovery, and potentially use this as a benchmark for the UKís current financial climate.
ìI would like to hear him promise that we are not going to see an increase in interest rates that could harm or potentially choke off recovery, until we are seeing peopleís personal recovery,î Ms OíGrady said.
ìI have raised this directly with Mark ñ that for us itís not just even a case of jobs when half of new jobs growth is self-employment.
ìPeople increasingly feel that if we are going into recovery, which the Government has said has been with us for two years now, then itís about time people got the chance not just to repair the nationís finances, but their own. Unless people have money in their pockets, local businesses and shop are going to suffer. Everybody should share in the benefits of recovery, not just those at the top.î
Ms. OíGradyís comments will be welcomed in particular by low-income families, and households everywhere, as her pertinent comments regarding stagnating real wages are of interest to all corners of society, not only those struggling with soaring bills on top of their other personal, economic woes.
Mark Carney is expected to speak in front of over 500 unionists next week, and more importantly has consented to questioning from the crowd, which could give an indication as to the direction the Bank plan on forging forward in. In terms of the content of his speech, Carney is merely supposed to reinforce current conceptions of an imminent base rate summiting at 3%.
Ms OíGrady welcomed news of Carneyís speech, further emphasising the idea of personal recovery rather than a broad economic recovery.
“I’m pleased that Mark Carney sees it as important to answer questions from shop workers and engineers. They will want to hear that he is not just making judgments about the economic recovery but also about the recovery in their incomes,” said O’Grady.
So, despite the UKís employment rate reaching record levels, thanks to the economy creating jobs at a breakneck pace over the second quarter, a marked drop in average earnings to 0.3% from 0.8% in the same period suggests the synthesis of a plethora of low-paid positions within the economy.
This surge in poorly paid jobs ought to be central to the dilemma facing the Monetary Policy Committee (MPC) regarding the setting of rates, according to Ms. OíGrady. Although, Carney has assured both the public and the financial sector that this is the case, it does no harm to stand up for the little guy in times of economic uncertainty.