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Recovery or not, workers have to fight


As the economy shows signs of growth, the bosses are determined to take the lion’s share

George Osborne boasts that Britain’s economy is “turning a corner” and that “those in favour of a Plan B have lost the argument”.

This bragging seems to be based on little beyond the latest Gross Domestic Product figures, which show the economy growing by 0.7 per cent between April and June this year. On top of 0.3 per cent growth in the first quarter, the economy is predicted to reach one per cent for the third quarter.

Yet statistics show that has been the slowest recovery from a recession for 100 years: a nil-growth economy for the past three years. It is now 66 months since the start of the recession in 2008, and UK GDP is still 2.9 per cent below its starting level.

This contrasts unfavourably with the severe recessions of 1920-24 and 1930-34, when GDP was nearly 7 per cent higher after the same length of time. And Thatcher’s deliberate slump of 1979-1983 saw GDP growth of 5 per cent within five and a half years. Since the fourth quarter of 2010, growth has been lower in the UK than in Canada, France, Germany or the US.

Nevertheless, a cyclical recovery, boosted by that in the US, is undoubtedly now underway. The Organisation for Economic Co-operation and Development has upped its forecast for the UK to 1.5 per cent growth in 2013, but below the 1.6 per cent it forecasts for Japan and the 1.7 per cent for the US.

However, this recovery still has powerful elements of artificial stimulation, just as the stronger US recovery is based on massive increases in money supply, or quantitative easing.

With one eye fixed on the 2015 election, Osborne’s encouragement of private debt has an explosive contradiction built in. Economists expect his mortgage subsidies, designed to give homeowners a “feel good factor”, to create a new housing bubble.

So the artificial boom economy of the pre-crisis years is still central to the cyclical upturn. Osborne denounces public debt but wants expanding private debt to fuel a consumer-led boom, in place of the manufacturing and export-led boom that he predicted.

However, this “recovery” has yet to bring any feel good factor to working people. Average wages have fallen in real terms by 5.5 per cent, almost £1,500 a year, since 2010. All state pensions and benefits have lost value too, as rising food, fuel, transport and housing costs cause millions to fall below the breadline and thousands to resort to food banks.

Child poverty has risen to 3.5 million, more than one in four. Almost 60 per cent of jobs created since spring 2010 have been in lower-paid sectors, such as residential care and retail, where median hourly pay is less than a quarter of the national hourly average.

The number of unemployed remains at 2.5 million, with nearly a million youth out of work and the same figure for the long-term jobless, a 20-year high. In Europe, only Greek, Portuguese and Dutch workers have fared worse.

Homelessness is actually on the rise, up 5 per cent between April and June 2013 compared with the same quarter last year, according to the Office for National Statistics.

If the indebtedness and the pressure on real wages continues to grow, then so too will the prospect of an explosion of wage struggles, especially amongst workers with skills in short supply. Unless they can do this, not only will they continue to suffer a depressed standard of living, their share of the national wealth will also continue its 30-year decline in comparison to profits and the income of the 1 per cent.

Already health secretary Jeremy Hunt has urged the pay review body to cancel the miserly 1 per cent pay rise due to 1.3 million NHS workers, despite Osborne saying we could afford it. Now is the time for the unions to implement the TUC resolution calling for coordinated strike action over pay.

Political factors can also be critical here. Cameron has shown himself to be far from a sure-footed operator in the way he grossly underestimated the willingness of the population (sensed even by many Tory MPs) to undertake another military adventure in the Middle East.

If Cameron and Osborne try to use parliament or the law to repress industrial or community resistance, then they could face a major explosion. We should not forget that great upsurges of workers’ struggles in Britain in 1924-26, and in France and the US in 1934-36 all came after a severe depression and in conditions of weakened union strength. Indeed this is exactly what prompted the desire to act “all together” rather than continue to be picked off sector by sector.

This article is based on an extract from Workers Power’s autumn political perspectives, which can be read in full at www.workerspower.co.uk/2013/09/political-perspectives-autumn-2013/

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