The Â£1,600 number used here has already been partially debunked by the Full Fact website. Labour compared average earnings and RPI and worked out that earnings have fallen short of RPI to the tune Â£1,600. They ignore of course that RPI is a redundant index and that under a more realistic index the loss of earning power would be about Â£1,000. Labour also ignores that the Coalition has ramped up the personal allowance from Â£6,475 to Â£9,440 in three years (worth Â£593 to most average earners). At the same time the Coalition can boast that for many people mortgage rates have stayed stable due to their macro economic policies. There are lots of swings and roundabouts in this calculation but Labour is exaggerating wildly.
Is it any surprise that wages are under pressure after Labour’s 7.2% single dip recession? The alternative is probably to have higher wage growth and much higher unemployment.
One of the good features of this economic cycle has been that jobs have held up throughout. In a trade off between stagnant earnings and high job losses I think that many of us would say that stagnant earnings is the lesser of two evils. Is Labour really arguing that wage inflation, the scourge of seventies Britain, should let rip pricing 100,000s out of jobs?