The Government claims their proposed pay-cut deal is ‘fair and equitable’. They must have a strange idea of fairness and equity because when you drill down into the Euros and cents you find that the lower paid will be hit harder.
Let’s take the example of single person who works 10 Sundays a year. Currently they receive double-time. The proposed pay cut would reduce this to 1.75. The impact on gross incomes is the same across the income categories.
However, once you factor in the impact on disposable income (that is, after tax) the situation changes dramatically.
Those on lower pay will find they suffer a much higher impact on their take-home pay – a hit that many lower paid cannot afford or absorb. The reason for this is the interaction between the standard rate of tax and the top rate of tax. The Government, of course, is aware of this impact.
This trend will persist with couples – whether it is one or both spouses working. Those on the standard rate of tax will suffer a higher impact on their net income than those on the higher tax rate.
The fact is that a number of cuts will have a disproportionate impact on those with lower incomes. UNITE estimates that the deal represents an average pay cut of 4.8 percent. This will be higher for those working shifts. And – it will be higher still for those on lower pay.
Not only has the Government victimised workers for the failure of their own policies – they have constructed a set of pay cuts that victimise the lower paid even more.
So much for ‘fair and equitable’.