The STUC has published three Spending Review tests to avert post-Covid depression as Chancellor fends off accusations of a return to failed austerity economics

November 24th 2020

The STUC has published three Spending Review tests to avert post-Covid depression as Chancellor fends off accusations of a return to failed austerity economics

November 24th 2020

It said its three tests, on keyworker pay, investment, and taxation, would all help heal an economy that is teetering on the brink of depression. They are:

Does it increase key worker pay through public sector pay rises and increases in the minimum wage? Is the fiscal stimulus package sufficient to boost demand, tackle climate change and address youth unemployment? And does it raise wealth or corporate taxes?

The trade union centre highlighted figures demonstrating that the chronic underpayment of key workers and inefficient investment is depressing wages and dragging down growth, under a UK tax regime that incentivises corporations to extract rather than invest in the economy.

It said that it is both right and realistic that workers and unions will be ready to resist regressive policies, and that their impact will inform the ongoing debate about the extent of powers Scotland should control.

The STUC is also releasing ten key facts (below) to illustrate its case.

STUC General Secretary Roz Foyer said:

“These tests will essentially determine whether the Chancellor’s promise of no return to austerity is hollow. As well as being a slap in the face for the key workers who have supported us all through this crisis, a wage freeze is the economics of depression. We need support for workers and massive investment in green jobs.

“We reject any attempt to pit private sector and public workers against each other. Half of our key workers are public and half private. That is why we are calling for an immediate minimum wage increase for hard pressed workers in retail, cleaning, hospitality and many other vital but undervalued jobs.

“The truth is, that we went into this crisis spending much less on public services than the EU average and raising far less revenue from corporations. If the Chancellor wants to find some revenue he should look to unearned income and asset wealth accumulation rather than cut the pay of workers. British billionaires have profited through the pandemic to the tune of £25 billion. Enough to fund a £2 per hour pay rise for every public worker in the UK.

“It is hard to describe the level of outrage that reducing workers’ wages would provoke. The STUC stands ready to support them in any way they choose to resist these attacks.”


Notes: Key Facts

Key Workers

1) Key workers’ average wages are 8% lower than other employees’, and 2) a third of Scotland’s key workers paid less than £10 an hour. 3) Women are twice as likely to be key workers than men, and 4) almost half of key workers with children have a partner who is in non-key work, so boosting keyworker pay will help families suffering from the Covid slump. 5) A pay rise of 5% above for all public sector workers will cost around £7bn, and around half of this would be recouped through tax revenues and the effect of local spending.


6) UK public spending remains well below the European average. 7) Youth unemployment in Scotland is up 5% in the last year to 14.3%, and 8) at least 1 in 10 Scottish workers in insecure work such as zero-hours contracts, agency, casual, seasonal work or low paid self-employment. 9) A £13 billion green stimulus package would create more than 140,000 much-needed jobs – a fraction of the £220 billion that the Resolution Foundation estimates is needed to prevent ‘dragging on growth’.


10) Pre-crisis, UK taxes on corporations was 6.5%, well below the European average of 9.7%, with a tax regime that allows corporations to draw income from dividends and capital gains that are exempt from the income tax schedule. Increasing corporation tax, and replacing inheritance tax with gift tax, and introducing minimum corporate tax liability (apportioning a firm’s global profits to the UK based on its sales or turnover in the UK), would all raise funds to pay for wage rises and economic investment, and promote productive economic activity.

For more information, please contact Dave Moxham, Deputy General Secretary, on 07891026870.

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