By Jonathan Davies

Ahead of the Trades Union Congress (TUC)’s “Britain Needs a Pay Rise” march today (Saturday), Christian May, Head of Campaigns at the Institute of Directors, emphasised that the FTSE executives being singled out by the unions are not representative of business as a whole.

Mr May said: "We have sympathy with the TUC’s argument because it remains the case that too many people are still feeling the effects of the recession more keenly than the benefits of the recovery. While the economy is growing and new jobs are being created, wage rises are painfully slow for many workers.

“Most business leaders will also look on pay in some quarters of the FTSE with incredulity. After all, the majority of IoD members earn around £100,000 a year, a significant amount, but nothing like the astronomical sums paid to some of the very top bosses. When the TUC protests about the pay gap between bosses and workers, remember they are not talking about business in general, but about a tiny number of people who run the world’s biggest firms. The boards of these companies can no longer be deaf to public opinion.

“The good news is that pay rises are on the cards at small and medium sized businesses, with two-thirds of IoD members saying they will raise staff pay either in line with or above inflation over the next six months. Crucially, they can only afford to do this because of improved company performance. For pay rises to be sustainable they have to be driven by more productive companies and better economic conditions.”

Why is the TUC marching?

Speaking ahead of the march, TUC general secretary Frances O'Grady, explained the decision to march on London: "The government says that the economy is growing. But that is not true for most people’s pay packets.

"As the Governor of the Bank of England told last month’s TUC Congress workers have suffered the deepest cut in wages since the 1920s. And you have to go right back to the 1870s to find a time when it took longer for wages to recover after a crash.

"Workers in the North East are, on average, £25 a week worse off since 2010 and real wage growth shows little sign of returning anytime soon.

"We have three big problems with pay.

"Firstly, one in five workers in the North East earns less than the living wage of £7.65 an hour, a number that rises to over one in three in places like Darlington and Blaydon.

"For women the situation is particularly bleak. In Hartlepool, Redcar and Cleveland and Darlington more than half of women working part-time are paid below the living wage.

"Ministers celebrate new jobs. But what they do not say is that our economy has only become very good at creating low-paid jobs. It is good that unemployment is not as high as many warned at the time of the crash, but creating poorly paid insecure jobs is not good enough. This is the world of zero-hours contracts where no-one dares ask for a rise, because they are frightened of losing their hours.

"And while there is nothing wrong with proper self-employment, too many of the recent self-employed are struggling to make ends meet. Others are pushed into self-employment by employers who do not even want to issue zero-hours contracts.

"Our second big problem is that even those with steady jobs have not had pay rises that keep up with inflation, especially when we look at the price of basics such as food, fuel and housing.

"There are no local authority areas left in the North East where local house prices are less than four times the average local salary.

"Even previously affordable areas, such as Darlington and Redcar and Cleveland are now out of reach for many local people. House prices in both of these areas are more than 4.5 times average applicant’s salary — the threshold at which Bank of England has told banks to limit the proportion of mortgages they offer.

"If this trend continues future generations have little hope of ever getting on the property ladder.

"Our third big problem is growing wage inequality. In 1998 top chief executives earned 45 times than average workers’ pay — enough for anybody I’d say. However, they now earn 175 times the average salary."

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