It’s not been a good week for government statistics. Police crime data, NHS waiting lists and now, daftest of all, a claim that pay is going up faster than inflation.
This is of course a UK Government spin release, not an official ONS data stream. What they have done is to argue take-home wages increased by at least 2.5% once tax cuts were taken into account. That is slightly more than the Consumer Prices Index (CPI) inflation rate of 2.4% in the year to April 2013.
This is simply a case of picking the statistics that make your case and ignoring those that don’t. Including tax cuts and not benefit cuts and taking CPI rather than RPI are the most obvious examples. Even RPI doesn’t fully reflect the increased cost of essential purchases that low paid workers have to focus on, as we have highlighted.
Labour's shadow treasury minister Cathy Jamieson got it right when she said: "These highly selective figures from the Tories do not even include the impact of things like cuts to tax credits and child benefit which have hit working families hard. Under the current government, real annual wages had fallen by £1,600 since 2010 and figures from the Institute for Fiscal Studies showed that families are on average £891 worse off as a result of tax and benefit changes since 2010".
The respected IFS also pointed out on R4 this morning that the average weekly earnings index showed wages rose, "quite a lot less quickly than inflation in the most recent months". Their own analysis suggested that, "if the recovery takes off and continues as expected, people will start to see their incomes rising by 2015... but they will be well below where they were six or seven years ago".
This is the same analysis we have seen from the Office of Budget Responsibility medium term forecasts for pay growth. Again we covered this data earlier this month.
As I set out in an article in the Scotsman, British workers have experienced the longest real wage pay squeeze since 1870. Inflation has risen faster than wages for almost 43 months. The share of the economy going on wages continues to decline. In the 1960s and 1970s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. It is no coincidence that, for the first time, we have more in-work poverty than out-of-work poverty.
The problem for government spin doctors is that workers can read their own pay packets and supermarket bills. So they know this is just mince!