Working people must not pay for economic crisis

The economy has shrunk by 2 per cent in the first three months of 2020, which represents the hardest first-quarter hit to the economy since the financial crash more than a decade ago.

Economists said this is only the tip of the iceberg as the first impacts of the coronavirus epidemic and the attendant shutdown begin to filter through.

Looking at March alone, when the shutting of businesses and the lockdown first began at the end of the month, the economy shrank by 5.8 per cent – the steepest monthly decline since record keeping began in 1997, according to the Office for National Statistics (ONS).

“With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall,” said ONS statistician Jonathan Athow. “Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially.”

Among the only industries that saw growth in the first quarter were IT support as well as manufacture of pharmaceuticals, soaps and cleaning products, which will be cold comfort for the vast majority of sectors which have seen sharp declines in demand.

The latest economic data from the Office for National Statistics (ONS) follows a warning from the Bank of England last week that the overall UK economy could slump by as much as 14 per cent in the year and unemployment could be set to double.

Needless unemployment and suffering

Despite chancellor Rishi Sunak announcing yesterday (May 12) that the government will until the end of the October extend its furlough scheme, where the state covers 80 per cent of wages for people who cannot work, far too many businesses are failing to take advantage of the subsidy and so needlessly contributing to rising unemployment and suffering.

This week P&O Ferries announced it would be axing more than 1,000 jobs despite benefiting from government subsidies during the pandemic and having the opportunity to furlough their workers till at least the end of October.

Unite slammed the decision and said it would do all in its power to reverse it.

“P&O should have been rewarding its workers for keeping vital supply lines open during the pandemic,” said Unite regional officer Davy Weeks. “Instead the company has stabbed them in the back by announcing more than 1,000 job losses.

“This is appalling behaviour, especially considering that P&O is still planning on paying out £270 million in dividends and is asking the government for £150 million in support,” he added. “Meanwhile, P&O’s parent company, DP World, earned profits of more than £1 billion last year.

“P&O’s excuse for these layoffs is that they are needed to make the company ‘viable’, when in fact it is about maximising profits at the expense of its staff.”

British Airways has also been accused of putting profits over people while still benefiting from government support in the form of a £300m coronavirus corporate loan – after the airline announced last month that it would cut an astonishing 12,000 jobs.

The airline sent redundancy notices out of the blue to thousands of workers without any consultation.

“BA’s decision to ignore the principle and intent of the job retention scheme and instead throw 12,000 workers onto the scrap heap is both unlawful and immoral,” said Unite general secretary Len McCluskey when the news first broke.  

“It is unlawful because they are denying these workers the meaningful consultation that the law and common decency says that they are owed,” he added.

“It is immoral because BA has been taking taxpayers’ money in recent weeks, money supplied on the proviso that the company put the workers on furlough while the industry reshaped.”

Public sector pay freeze

Ordinary workers paying for a crisis they did not cause was a theme that emerged yet again today (May 13) after the Telegraph obtained a leaked report showing the government is considering a public sector pay freeze to help pay for its coronavirus spending.

In addition to a two-year pay freeze, other proposals mooted in the report to fund government debt, which is expected to exceed £300bn, include a hike in income tax and ending the triple-lock on pensions.

News of a possible pay freeze for public sector workers – the vast majority of whom have continued to work throughout the crisis, often literally saving people’s lives – comes after these workers have endured nearly a decade of pay freezes. Such pay freezes have amounted in real terms to devastating pay cuts.

Unite assistant general secretary Gail Cartmail called on the government to immediately disavow the idea of public sector pay freezes.

“This is a huge own goal by the government,” she said. “Public sector workers are on the frontline saving lives, keeping people safe and maintaining the economy.

“To suggest that their hard work, endeavour and sacrifice should be rewarded with a freeze in their pay is simply insulting.

“A public sector pay freeze is totally at odds with what the general public wants,” she added, highlighting Unite’s own survey of the general public last week which found that 71 per cent wanted increased taxes of the wealthy rather than a return to austerity, with other key priorities being increased funding for the NHS and more pay for key workers.

“There simply cannot be a return to austerity mark two.  Working people must never again pay for a crisis not of their own making,” Cartmail went on to say. “I challenge the PM to step up and step away from this suggestion without delay.  He, among countless others, has seen first-hand the value of public sector workers literally saving lives.

“We remain in the midst of the pandemic and the government must rule out this dangerously demoralising proposal immediately so that nurses, paramedics, refuse collectors and the millions of other public sector workers are reassured that they will be fairly treated when this crisis ends.”

By Hajera Blagg