“Car worker wage drop casts doubt on recovery”

An article in today’s Financial Times reports that despite production of motor vehicles in the UK having increased by 45% in the past 4 years lower paid workers have seen an erosion of the value of their earnings.

“A sharp rise in agency staff and temporary contracts at the UK’s booming car factories has meant that the average wage for almost a third of the industry’s workforce has fallen in real terms during the last four years, finds an FT investigation. The falling salaries and increased use of flexible hour workers calls into question the true benefits of one of the country’s most lauded post-recession industrial recoveries.”

Average salaries have risen just 2.3% in real terms and the wages of the lowest paid 30% have fallen 7.5% according to ONS data. Meanwhile the average director at the 6 largest UK car makers have seen their wages increase by 19%.

“The news comes as government data suggest real wages in the UK have fallen consistently since 2008, as earnings growth fails to keep up with inflation.”

UK car production topped 1.5 million in 2013, the highest since 2007

Yet only 87,000 people were employed building motor vehicles last year, according to government data, compared with 92,000 in 2007 and 124,000 in 2004.

“Those workers earned a collective £3.6 billion last year, 19% more than in 2009, but a quarter less than 2004’s total pay packet in real terms.”

The FT cites Ellesmere Port where workers have received only one wage rise in 5 years, and are working reduced hours. “Their situation belies the popular image of a resurgent car industry.” These conditions were part of the agreement for the introduction of a new model of the Astra in 2015. There will be hundreds of recruits for this though they will receive only 70% of the standard salary for their first 4 years, while pensions will be less generous.

The FT reports that average salaries at 5 of the UK’s largest carmakers have remained flat in the 3 years to 2013

“The findings question the benefits of a recovery that has been trumpeted by the government as a shining example of its attempts to rebalance the economy towards manufacturing and away from financial services.”

Total annual pay at UK automotive manufacturers was £3.6 billion, more than £1 billion less than its historic high in 2004, in spite of production reaching up to levels in that year, as fewer people operate factory lines.

In 1978 493,000 people worked on vehicles and parts in the UK. Today’s total is roughly a quarter of that, following plant closures and the arrival of robot labour.

In the 3 years to 2013 the average gross salary at JLR, Vauxhall, Nissan, Honda and Toyota, rose by only 0.3% when adjusted for inflation

Excluding JLR where workers enjoyed an average gross salary increase of 14%, staff at the other 4 saw the value of their average annual wage packets fall 3.7% over those three years according to financial statements and company data.

The average employee at Nissan, the UK’s largest carmaker by production, saw their pay fall 7.5% in real terms over 3 years to March 31st 2013 according to company data. Toyota staff experienced similar erosion.

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