Friday, 4 January 2013

It's perfectly fair for benefits to rise faster than wages

Ian Duncan Smith, the Tory Work and Pensions Secretary has today said that it's "unfair" for benefits to rise at a faster rate than wages.

To back up his argument he's wheeled out the statistic that jobless benefits rose 20% in the last five years, compared with an average 12% rise in private sector pay.

And, on the face of it, that seems unfair - assuming IDS's statistics are accurate, which they usually aren't.

But what he misses is that, in the economic good times, real wages rise much faster than benefits. Whereas benefits only ever rise in pace with inflation in order to keep pace with the bare minimum someone needs to live on.

When the economic bad times hit then yes, real wages stagnate. But this is exactly the time when it's vital that  unemployment benefits rise with inflation. Because during the bad times it's much harder to find a job and, while unemployed people would very much like to have a job, they often simply aren't able to find one and are forced to depend on unemployment benefit.

And here's the thing: Job Seeker's Allowance is £71 a week (or £56.25 a week if you're under 25) which comes out to under £3,700 a year - and is dependent on recipients actively looking for a job, if they don't look hard enough then their benefits get cut. Now, if that's the amount of money you're living off of, a rise of 5% in inflation, as we saw last year, means that your living costs go up by 5% and if your benefits, which are already the absolute bare minimum you need to survive, don't rise with your living costs then you have nothing to fall back on. Increasing benefits by inflation just keeps you standing still - nothing more.

On the other hand, if you're on, for example, £26,000 a year (the average wage) and you only get a 1% rise in your pay while benefits go up by 5% then yes that, on the fact of it, seems unfair.

But a 1% rise for someone on £26,000 a year is £260 extra while for someone on JSA a 5% rise is just £185 a year. And, on top of that, someone on £26,000 is much more able to afford to absorb a rise in living costs than someone on JSA of £3,700 a year.

So to make sure that benefits rise enough for people to survive on them is absolutely fair. If real wages are rising slower than living costs then the answer is to try and increase wages. It most definitely isn't to make life harder for the hundreds of thousands of people in this country who are unemployed through no fault of their own because there simply aren't enough jobs to go around.

5 comments:

  1. Not just the unemployed of course,though the attempt to paint this false dividing line by Government is clear.IS as an example includes many that work as well as the oft stated Tax Credits.It is also beyond cynical to attempt to make a pretence of "protecting" Carers and the disabled from the reduction.Only the support ELEMENT of ESA rises(those on WRAG apparently are no longer sick/disabled) ,premiums for these purposes in IS rise with inflation(and let us not forget all have already been linked to the lower measurement of it).DLA and CA are non means tested are to be "saved",however given what is the actuality the poorest sick/disabled and their Carers are the hardest hit.Good post and refreshing to hear.

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  2. Very well said, George. I find the asinine repetition of this highly selective statistic (pretending that the world begin in 2007 *because it suits us, OK?* is only the biggest piece of dishonesty involved) and the vile demonisation of benefit claimants reduces me to incoherent rage. Glad to see someone's able to stay with it long enough to point out why it's b*ll*cks!

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  3. As i write this on 8th January at 18:30 there a currently no Lib Dems sat on the government benches, quite disgraceful.

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  4. George - once more, you tell it as it is, with compassion too. Thanks.

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  5. thanks for share.

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