Edinburgh wage rates divided in economic crisis

The Capital's economy has experienced many ups and downs. Montage: Dave Hamburgh
The Capital's economy has experienced many ups and downs. Montage: Dave Hamburgh
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NEW figures have revealed the full impact of the economic crisis on ordinary people, with one part of the Capital among the five areas in Scotland to have suffered the biggest real-terms fall in earnings.

According to the statistics, the average wage in Edinburgh North and Leith constituency dropped by 17.3 per cent over the past five years, once inflation is taken into account.

Other parts of the Lothians also saw a significant fall in earnings – Midlothian by 13.5 per cent and Edinburgh East by 7.4 per cent.

But the figures – which coincide with the latest unemployment data showing fewer people out of work in Scotland – also revealed a sharp divide within the Capital. Average pay actually increased in two constituencies – Edinburgh South saw earnings increase by 4.2 per cent and in Edinburgh West pay was up by 1.3 per cent.

The analysis by the Scottish TUC was based on official UK Government data for average wages in 2007. They calculated how these would have risen if they had kept in line with inflation, then measured the gap with actual wages last year.

It showed real-terms wages across Scotland had fallen by an average of 6.4 per cent in Scotland since the start of the economic crisis, leaving a typical wage earner £27.12 a week or £1410.24 a year worse off than if wages had kept pace with inflation.

Five Scottish constituencies recorded a fall in real wages of over 15 per cent: Dumfries and Galloway (24.2 per cent), Glasgow East (23.0 per cent), North East Fife (18.7 per cent), Edinburgh North and Leith (17.3 per cent) and Berwickshire, Roxburgh & Selkirk (15.8 per cent).

STUC deputy general secretary Dave Moxham said many of the areas recording the biggest drops in real earnings were places with a high proportion of public sector employment and the pay fall reflected the impact of the current wage freeze.

And he said the figures threw an important light on the jobless figures published yesterday, which put Scotland’s unemployment total below 200,000 for the first time since 2009.

The figures showed 197,000 people out of work, including those not eligible for benefits – 21,000 fewer than the total 12 months ago. At the same time unemployment across the UK increased by 70,000 to 2.56 million. The Scottish jobless rate is now 7.3 per cent, compared to 7.9 per cent for the UK as a whole.

But the STUC said many of the jobs were part-time or low-paid.

Mr Moxham said: “The unemployment figures for Scotland are relatively good news, but the impact that will have on the economy in terms of increasing demand and boosting growth is likely to be limited if people have less money in their pockets.

“For many people, things are going to get worse before they get better and even if they do begin to pick up it will go a lot more slowly than has been predicted.

“Without a change in UK Government policy, the future looks bleak.”

Edinburgh Northern & Leith Labour MSP Malcolm Chisholm said the drop in real-terms earnings was a “massive” issue. He said: “People’s living standards are being squeezed and it’s extremely concerning.

“As the Tories keep forgetting, many people in poverty are also in work. That’s why policies like the Living Wage are so important. For people on low and middle incomes, we have to be looking to reverse their situation.”

Edinburgh South Labour MP Ian Murray said the overall increase in pay levels recorded in his constituency – and its high employment levels – reflected the make-up of the area, but also masked the plight of poorer areas within the seat.

He said: “While there are pockets of quite high unemployment in Gilmerton and Gracemount, employment in the constituency as a whole is very high and that’s why it is skewed in terms of better earnings.”

He said Edinburgh South was a highly residential constituency with a stable community whereas Edinburgh North & Leith tended to have a more transient population.

“In terms of real earnings, the problem is inflation was running out of control at five per cent two years ago and is still above the government target of two per cent, which means real-term wages are falling.”

Finance secretary John Swinney welcomed the “positive trends” in the jobs figures. “Scotland now has a higher employment rate and lower unemployment rate than the UK, stronger economic growth and youth unemployment figures that continue to improve and outperform the UK.”

Scottish secretary Michael Moore said the statistics were encouraging. He said: “We know that every person taking up a job helps move the economy into a stronger position.”

Cost of living soars

ENVIRONMENTAL warden Andy Barnett says the rising cost of living and his frozen wages have left him noticeably worse off.

The 30-year-old, who lives in Wester Drylaw, says: “This is year four of a sustained wage freeze, but inflation has been running at around three per cent and gas and electricity bills have shot up.

“Whereas seven or eight years ago you felt quite flush when you got paid, now all of a sudden a couple of days after pay day, when everything comes out, you wonder: how am I going to make this last to the end of the month? It’s becoming really difficult.”

He says he worries that if his car breaks down he might not be able to afford to mend it. He has not been abroad on holiday since 2002, except for his honeymoon a couple of years ago.

And he says: “You even have to think twice about whether you can afford to go out to the pub with friends for the evening. I find it bad enough, but there are lots of people who are worse off than me.”