Hello all
It’s reported that the Chancellor has predicted in his budget that inflation will fall from 10.7% to 2.9%. We will see.
But here’s something to remember about inflation. A Twitter user summed it up like this:
One day, I sell you a slice of cake for £1
The next day, I sell you a slice of cake for £2. Inflation is 100%.
The day after, I sell you a slice of cake for £3. Inflation is at 50%.
Hurray, the rate of inflation has fallen! It’s been cut in half – isn’t that great?
The problem is that yesterday’s inflation is still factored in to the cost of that slice of cake, as well as today’s. And so it is with price increases for all the things we need to pay for – food, clothes, rent, mortgage payments, electricity, gas, etc. etc.
If prices go up one year, that increase is permanently incorporated into prices in the future, even if (quite a hypothetical if, but a useful one to help us think about the problem) prices the next year do not go up at all.
In 2021/22, inflation was high and into double figures by the end of the financial year. We got a pay rise of 1.75%. That means we have less, in real terms, to live on than before.
Never mind, our bosses tell us, you got a proper pay rise in 2022/23 didn’t you? Well yes, we did – but the thing is, that rise wasn’t even enough to cover price increases in that year. It certainly didn’t do anything about the permanent cost of the outrageously low wage increase in 2021/22.
Until the unfairness of 2021/22 is corrected, it will continue to hold down our living standards. And it will continue to cause recruitment and retention problems, leading to added stress for remaining staff.
St Mungo’s ended 2021/22 with a lot of money in the bank, in part because it was shielded from the effects of inflation. St Mungo’s work is labour intensive so the majority of its expenditure is on wages. And those wages went up by only 1.75% – meaning that the organisation, unlike its employees, was shielded from the effects of inflation. That’s why there was £22.5m in the bank at the end of the year, compared with a target range of £14-18m. It’s all in the published accounts, so if anyone tries to tell you differently, take it with a pinch of salt.
If you’re a Unite member, please send your ballot paper in with a yes vote. If you haven’t received the ballot paper, please let me know.
If you’re not a member of Unite, now would be an excellent time to think about joining https://join.unitetheunion.org/.
If you have any questions, please get in touch.
Best wishes,
Jacob
Jacob Sanders
Unite Convenor, St Mungo’s
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