Dear Prime Minister,
We are writing following your recent speech in Blackpool in which you warned of the dangers of a ‘wage-price spiral’ and argued that wages should therefore not rise to keep up with rising prices.
As economists and economic policy experts, we believe that suppressing wages is the exact opposite of what is needed in response to this current wave of inflation, and risks fuelling dramatic increases in poverty and hardship, and ultimately a recession.
Inflation today comes from huge external factors, including the aftershocks of lockdowns, war in Ukraine, and extreme weather events across the globe.
It is not the product of domestic wage demands.
The Bank of England has made it clear that labour market pressures account for only a fraction of the price increases we have experienced in recent months.
There is no ‘wage-price spiral’ in the UK. In fact, wage growth has lagged far below the increase in prices.
By taking aim at workers asking for pay rises in the face of big hikes in food and fuel costs, the government is fighting the wrong battle.
Workers have experienced over a decade of stagnant real wages, which have suppressed living standards and led to a huge growth in in-work poverty.
Steep price rises for essentials today, from food to energy to rent for housing, are coming on top of a decade of exceptionally low wage growth.
In this scenario, it is perverse to lay the blame for rising inflation at the door of the workers.
In fact, the greater risk is that incomes rise too slowly, entrenching poverty and pushing more families over the edge into destitution, whilst also further undermining demand in the economy and plunging the country into a recession.
We therefore urge you to take urgent, additional action to support living standards, by committing to substantial increases in the minimum wage, public sector pay, and social security payments.
Instead of asking ordinary people to bear the cost of tackling the inflation crisis, the government should focus on tackling the real causes of the crisis, using all the tools at its disposal to hold down energy costs, clamp down on excess profits, and unblock global supply chains.
Making ordinary families poorer is a strategy that will only lead to more misery and accentuate the impacts of the current crisis.
Yours sincerely,
Christopher Cramer, Professor of the Political Economy of Development, SOAS University of London
Barbara Hariss-White, Emeritus Professor and Fellow, University of Oxford
Judith Heyer, Emeritus Fellow, University of Oxford
Susan Himmelweit, Emeritus Professor of Economics, Open University
Suzanne J Konzelmann, Professor of Economics, Birkbeck, University of London
Simon Mohun, Emeritus Professor of Political Economy, Queen Mary University of London
Richard Murphy, Professor of Accounting Practice, Sheffield University Management School
Ozlem Onaran, Professor of Economics, University of Greenwich
Carlos Oya, Professor of Political Economy of Development, SOAS University of London
Kate Pickett, Professor of Epidemiology, University of York
Sergio Rossi, Professor of Macroeconomics and Monetary Economics, University of Fribourg
Diego Sanchez-Ancochea, Professor of the Political Economy of Development, University of Oxford
Pritam Singh, Professor Emeritus, Oxford Brookes Business School
Guy Standing, Professorial Research Associate, SOAS University of London
Cyrus Bina, Distinguished Research Professor of Economics, University of Minnesota
Mark Blyth, Professor of International Economics, Brown University
Guglielmo Forges Davanzati, Professor of Political Economy, University of Salento
Jean Luc de Meulemeester, Professor of Economics and History of Economic Thought, Université Libre de Bruxelles
David Tyfield, Professor in Sustainable Transitions and Political Economy, Lancaster University
Mehmet Ugur, Professor of Economics and Institutions, University of Greenwich
Carolina Alves, Joan Robinson Research Fellow in Heterodox Economics, University of Cambridge
Mary-Paz Arrieta-Paredes, Senior Lecturer, University of Greenwich
Hannah Bargawi, Joint Head of Economics, SOAS University of London
David Barlow, Lecturer in Economics, Newcastle University Business School
Alberto Botta, Associate Professor of Economics, University of Greenwich
Christine Cooper, Chair in Accounting and Director of Research, University of Edinburgh
Sara Gorgoni, Associate Professor in Economics, University of Greenwich
Alexander Guschanski, Senior Lecturer in Economics, University of Greenwich
Jason Hickel, Visiting Senior Fellow, London School of Economics
Leslie Huckfield, Lecturer, Glasgow Caledonian University
Neil Lancastle, Senior Lecurer, De Montfort University
Stewart Lansley, Visiting Fellow, University of Bristol
Jane Lethbridge, Associate Professor in Public Policy, University of Greenwich
Sara Maioli, Senior Lecturer in Economics, Newcastle University
Imko Meyenburg, Senior Lecturer in Economics and International Business, Anglia Ruskin University
Jo Michell, Associate Professor of Economics, University of West England Bristol
Maria Nikolaidi, Associate Professor in Economics, University of Greenwich
Cem Oyvat, Senior Lecturer in Economics, University of Greenwich
Jeff Powell, Senior Lecturer in Economics, University of Greenwich
Lucia Pradella, Senior Lecturer in International Political Economy, King's College London
Kobil Ruziev, Associate Head of Department, University of West England Bristol
Josh Ryan-Collins, Associate Professor in Economics and Finance, University College London
Navjot Sangwan, Lecturer in Economics, University of Greenwich
Luca Tasciotti, Senior Lecturer in Economics, University of Greenwich
Elisa Van Waeyenberge, Senior Lecturer, SOAS University of London
Rafael Wildauer, Senior Lecturer in Economics, University of Greenwich
Yuliya Yurchenko, Political Economist, University of Greenwich
Patrick Allen, Chair, Progressive Economy Forum
Christine Berry, Independent Researcher,
Fran Boait, Executive Director, Positive Money
Sarah-Jayne Clifton, Executive Director, Economic Change Unit
Miatta Fahnbulleh, Chief Executive, New Economics Foundation
Lucy Findlay, Managing Director, Social Enterprice Mark Company CIC
Katie Gallogly-Swan, Economic Affairs Officer, UNCTAD
Níall Glynn, Founder, Working Class Economists Group
Joe Guinan, Vice President, The Democracy Collaborative
Lukas Hardt, Policy and Engagement Lead, Wellbeing Economy Alliance Scotland
Paul Hebden, Acting Executive Director, Tax Justice UK
Luke Hildyard, Director, High Pay Centre
Mathew Lawrence, Director, Common Wealth
James Meadway, Director, Progressive Economy Forum
Howard Reed, Director, Landman Economics
Sara Reis, Deputy Director and Head of Research and Policy, UK Women's Budget Group
Mary-Ann Stephenson, Director, Women's Budget Group
Gary Stephenson, Independent Economist,
Will Stronge, Director, Autonomy
Geoff Tily, Senior Economist, Trades Union Congress