Inflation matters because higher prices eat into incomes and if incomes don’t grow to match prices, then living standards will fall. The Office for Budget responsibility (OBR), which provides independent and authoritative analysis of the UK’s public finances, said that the cost of living could rise to its fastest rate for 30 years.
We are now entering a period of high inflation and that requires a different approach to pay determination.
Since the implementation of the last pay increase in April, almost all members of staff in Lloyds will have seen their standard of living fall significantly. That’s going to get worse if the two in-house staff unions agree to another below inflation pay increase next year. The signs are not looking good.
Despite the modest reduction in September, most forecasters expect the Consumer Price Index (CPI) rate of inflation to rise to 5% – 6% in the first half of next year. If those forecasters are right, that would imply the Retail Price Index (RPI) measure of inflation will be 7% or more. That will be the highest level it’s been since April 1991. As members will know from previous Newsletters, RPI is the only measure of inflation that includes housing costs, which for most of us is our largest monthly expenditure. It’s the one measure of inflation used by trade unions when negotiating pay increases.
So, a group-wide pay pot of less than 5% is not going to deliver meaningful pay increases for most staff. In that scenario, staff would see their standards of living reduced at the exact time when a cocktail of fiscal events, liked increased taxes, is going to put the squeeze on household incomes. Relying on bonuses is not the answer and Accord and Unite need to understand that before they try and sell Lloyds staff down the river, again. The bank will want to talk about total pay – it couldn’t last year because nobody got any bonuses other than the chosen few – but we need to focus on basic pay. The total remuneration for all Group employees fell by 8% last year to £2.6bn from £2.9bn the previous year.
The hybrid working model is more efficient and the evidence from members suggests very clearly that output per employee increased during the pandemic. In our last home working survey 72% of staff said they were working more than 7 hours a day, 51% said they were more productive working from home and 35% of line managers said their teams were more productive. All of that was reflected in the bank’s Q3 results which it announced last week.
The bank should easily be able to afford an inflation busting pay pot this year and nobody, especially Accord and Unite, should accept anything less.
Members with any questions on this Newsletter should contact the Union’s Advice Team on 01234 262868 (choose Option 1).