Unite report finds that in the last six months company profits are responsible for almost 60% of inflation rise.

“It’s not hard pressed workers who are driving inflation, it’s Britain’s bosses.”

It’s inflation and corporate profits, not workers’ wages, which are at the heart of the cost of living crisis currently gripping the UK according to a compelling new report. The Unite report ‘Corporate Profiteering and the Cost of Living Crisis’ argues that it is time to demand restraint on profiteering not pay.

FTSE 350 profits rocket

An analysis of the FTSE 350 reveals profit margins for the UK’s biggest listed companies were 73% higher in 2021 than pre-pandemic levels in 2019. Even though sales were down in 2021, profits still rocketed.  Even removing energy companies from the tally, average profit margins still jumped an astonishing 52%.

Unite general secretary Sharon Graham said: “The weight of evidence shows that the UK is in the grip of a profiteering crisis. Workers’ wages and what they can buy, are being squeezed by corporate wreckers pursuing runaway profits, quite literally at our expense.”

UK wide company profits fuel inflation

A further examination of data from the Office for National Statistics (ONS) shows that company profits jumped 11.74% in the six months from October 2021 to March 2022. In the same period labour costs fell by 0.8%, accounting for inflation. 

This jump in UK wide company profits is responsible for 58.7% of inflation in the last half year – as opposed to just 8.3% due to labour costs.

The Governor of the Bank of England, Andrew Bailey and the Prime Minister Boris Johnson have both pointed the finger at workers’ pay warning of a ‘wage price spiral’. But the weight of evidence clearly shows workers’  wages, and what they can buy, are being squeezed by companies pursuing runaway profits.

Sharon Graham said: “The Governor of the Bank of England and Boris Johnson want workers to think it’s irresponsible to demand better wages to pay for crippling food and energy prices. But Unite’s report exposes the truth. It’s not hard pressed workers who are driving inflation, it’s whole swathes of corporate Britain. In the last six months company profits were responsible for almost 60% of inflation.”

High inflation was initially sparked by supply chain shocks. But there are strong signs that “price gouging” – where businesses hike their prices above supply costs – are now pushing a “second round” of inflation. So while the pandemic, energy demand and the invasion of Ukraine have undoubtedly caused ruptures in supply chains, any “inflation spiral” is being pushed by profits. 

Average executive pay increased to £2.59 million

The report also exposes how corporate executives have benefited from these rising profits. Between 2020 and 2021 average pay for the highest paid directors of the UK’s biggest listed companies leapt a colossal 29% from £2.01 million in 2020 to £2.59 million in 2021. 

Sharon Graham continued: “It’s not just energy companies. There are businesses right across our economy and their directors who have made vast sums of money from Covid 19 and the inflationary pressures that have followed.

“Those who have profited from the crisis should pay for it. Unite makes absolutely no apologies for demanding better pay for our members. Wage restraint? It’s time to demand profit restraint.”

Professor of accounting Prem Sikka, Member of the House of Lords said: "This report focuses upon corporate profiteering, the resulting hardship and the government's failure to tackle it.  Profits for the few are the source of crisis for many. It could not be more timely.”

ENDS

Contact: Ciaran Naidoo on 07768 931 315 

Unite is the UK and Ireland’s leading union fighting to protect and advance jobs, pay and conditions for members working across all sectors of the economy. The general secretary is Sharon Graham.