The key political reality for British workers since the end of the 1970s has been that our share of economic growth has, as a general trend, fallen.
For almost all of the 1960s and 1970s the UK wage share of Gross Domestic Product was between 58% and 61%. The exception was the three years 1974 to 1976 where the wage share briefly went above 62% of GDP (peaking at 64.5% in1975). After 1981 the wage share declined rapidly, falling to 53.8% of GDP by 1988. The end of the 1980s saw a partial recovery (to 56% by 1991) and then a further decline, to a low point of 51.7% in 1996. The late 1990s saw another partial recovery (to 55.3% in 2001) and then a small decline through the 2000s to 53.5% in 2007.
Alongside the fall in the wage share, there has been a general rise in the inequality of earnings. The most highly paid have taken a larger share.
As shown in the TUC Report “Decent Jobs Deficit” another characteristic of the contemporary labour market has been the increase in insecure forms of work. Over 1 million people are in part-time work because they cannot get full-time work and there has been a corresponding growth in zero-hours contracts, agency work and involuntary “self-employment”. Around 6.4% of all employees in the UK are on temporary contracts. Since 2011 the reported incidence of zero-hours contracts has risen rapidly, from 0.6% to 2.4% of the working population. The problem of low pay is particularly associated with workers in insecure employment. The Quarterly Labour Force Survey April-June 2013 found that average gross weekly pay for permanent workers was £479.26, whilst for those on zero-hours contracts it was £185.19. The growth in insecure and badly paid employment is also associated with a feature that Dr Steve McIntosh called “hollowing out”, in a Report he did last year for the Department of Business, Industry and Skills. This meant that some local economies are losing jobs in the middle rank by income, whilst the number of jobs that are the lowest paid has grown. The September 2014 “Centre for Cities” Report “Unequal Opportunity” showed that this feature affected some cities more than others. Of 59 cities compared in the Report Blackburn with Darwen ranked 7th highest in respect of the growth of polarization between 2001 and 2011 – and this is an area where low pay is already prevalent.
In Blackburn one in three workers earns less than two thirds the median wage but this falls to one in ten in the South East.
It is a story made even worse by what has simultaneously happened to our social wage and our social infrastructure.
If, for instance, unemployment benefit (now Jobseekers Allowance) had kept pace with earnings since 1979 it would now pay over £100.00p a week. Instead, our Welfare Benefits system has become, for many, a punitive and demeaning nightmare.
Our railways and public utilities have been handed over to the private sector solely for the purpose of increasing ways in which those with money can make even more profits. Since privatisation, the average price of a train journey has increased by 23.5% in real terms. Fares on some routes have increased by 245%. If our railway was run in public ownership, we’d save £1.2 billion a year, enough to fund an 18% cut in rail fares. That’s because we wouldn’t be wasting money on shareholder profits, fragmentation and a higher cost of borrowing. The real prices of gas and electricity have increased by 13% and 67% respectively since the year 2000. Corporate Watch research suggests each UK household could save £158 a year if energy was publicly owned. Over 10% of English households live in fuel poverty. It doesn’t need to be this way. Studies examining the UK energy market have concluded that electricity prices are 10-20% higher than they would have been without privatisation.
Clearly, the encouragement of economic development on its own will not address these issues. We do believe, nevertheless that it can have a role to play in encouraging better quality and more remunerative employment opportunities and in reversing the social consequences of 1980s “de-industrialisation”, regional disparities and “hollowing out”.
From 1979 onwards, British governments have been inclined to let market forces dominate and the rules of the EU were interpreted – perhaps more strongly in the UK than elsewhere – as placing restrictions on the degree to which the state could intervene. The outcome has been distorted growth across the economy as a whole – with the City flourishing whilst other parts of the country have suffered. We support and encourage more active government involvement in delivering an “Industrial Strategy”, or “Economic Development”, with the aim of creating an environment conducive to both national prosperity and the repair of the social issues we identify above.
We therefore see “Industrial Strategy” as being a high-level description of what sorts of action the British government could and should take, within the context of a market economy:
- To develop and sustain product making businesses whose profits can contribute towards
national prosperity and income;
- To develop products that will contribute towards human wellbeing and quality of life;
- To ensure national self-sufficiency in key areas of production; and
- To create opportunities for stable and sustainable employment distributed equitably across
the country.
Here we make available some of the Reports we have produced on the issue in recent years:
See also our more recent article on “Levelling Up”: “Levelling up” – public investment needed to address geographic inequalities – Blackburn and District Trades Union Council (bdtuc.co.uk).