The falling value of average earning in the Bath area
The real value of average earnings in the Bath area has fallen by more than nine per cent in the last four years, according to union chiefs.
The GMB union says the rise in the B&NES average wage from £25,034 in April 2008 to £26,411 last November masks a 9.3 per cent real terms fall, once inflation has been taken into account.
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Bath view
That fall is lower than the one for the South West as a whole, of 11.7 per cent.
The percentage fall in Wiltshire was the second highest in the region, at 17.7 per cent, while the national fall was said by the union to be 12.8 per cent.
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John Phillips, the GMB’s regional secretary, said “These figures showing a drop of 11.7 per cent in the real value of earnings in the region explain why we are on our way to a triple dip recession.
“Consumer spending is the single biggest component of demand in the economy and with the real value of wages from employment falling there is no mystery as to why the economy is in a downward spiral. The replacing of full time permanent jobs with part time and temporary lower paid jobs is part of this.
“A living wage and pay rises to help hard pressed families as bills go through the roof are needed to boost the economy and stop the downward spiral.”
Comments
by rogerh3
Wednesday, January 16 2013, 11:28PM
“It's a downward spiral, which is why Keynes advocates increasing public expenditure in order to break out of the negative cycle. Not that he was against reducing deficits, but the time to do that is when the economy is strong enough to support it.”
by bath1946
Wednesday, January 16 2013, 10:17PM
“Roger, as a fellow Keynesian i agree. It would be interesting to quantify the increased numbers within that average of £26,411 who are on minimum wage or part-time working in order to establish the true reduction in real terms due to wage freezes or caps. Other factors impacting consumption are numbers of unemployed, increased numbers of low income pensioners, artificial boosts such as internships and increased student numbers.”
by rogerh3
Monday, January 14 2013, 9:06PM
“The economy isn't suffering as a result of the drop in average earnings."
Of course it is. It's basic economics. An economy depends on having customers to purchase goods and if they have less money to spend then inevitably that economy must suffer. Moreover due to the effect of the 'multiplier' this drop in expenditure is magnified - and that most conservative of bodies, the IMF, has now increased its estimate of the effect of this multiplier from 0.5 to between 0.9 and 1.7. Moreover those with the lowest earnings have the greatest propensity to spend their income - unlike the richer who'll hoard much of it away where it benefits nobody else. Keynes, of course, knew that the effect of the multiplier was far greater.
.”
by jezer
Monday, January 14 2013, 4:36PM
“JessePinkman, aren't our leaders entitled to be paid what they are worth? Yes, I am being ironic, a 30% pay cut would be more like it.”
by mopsus2
Monday, January 14 2013, 2:36PM
“Are changes in house prices factored into these calculations? Paying for a roof over your head is a major part of most people's expenditure.”
by JessePinkman
Monday, January 14 2013, 2:17PM
“MPs seem to think the economy is robust enough for them to have a 30+% pay rise.”
by mcupis
Monday, January 14 2013, 1:55PM
“Average earnings are falling because of the state of the economy.
The economy isn't suffering as a result of the drop in average earnings. The individuals affected are, and that is a serious matter, but the fact is that in the overall scheme of things the cost to the economy of the reduced average earnings of those people is a very small fraction.”