contribution by Matthew Butcher

Yesterday’s report by the High Pay Commission revealed that the top 0.1% of UK earners will see their pay rise from 5% to an estimated 14% of national income by 2030.

Worse, the ratio between executive pay and the national median income is set to rise to 214:1 by 2020. But not only do Britain’s biggest companies employ some of the richest people in the country but their workforce includes some of the poorest too.

The working poor, many of whom work for FTSE 100 companies, make up an unsettling proportion of the workforce in this country. Over 3.5 million people over 22 survive on less than £7 an hour, with the proportion amongst young workers being even higher. And inflation, currently at 4% is expected to rise.

Growing up in families with low paid parents has effects on children for the rest of their lives. Of the 2.8 million children in the UK living in poverty in 2008/9, a shocking 59% of them have one or both parents in work.

Children who grow up in poor households are, according to the Marmot Review, more likely to be affected by obesity, heart disease and mental health problems. Parents on low pay also end up having less time to spend with their kids.

A cleaner at Marks and Spencers, working for a contractor, described her shifts: “I work 7 days a week and like many other cleaners I have to get up at 3 o’clock in the morning to get to work from Leytonstone where I live. We can’t afford the tube and I spend 2 hours one way to get to work. My morning shift is only 4 hours.”

FairPensions and its union partners are calling on Britain’s biggest listed companies to take action on low pay by implementing a Living Wage for all of their on site staff.

A Living Wage is the minimum hourly wage required for housing, food and other basic needs for an individual and their family. Within London it is set each year by the Mayor’s office and is currently £8.30. A single rate for the rest of the country is currently £7.20 per hour. The National Minimum Wage is £5.93 per hour (rising to £6.08 in October).

But the public can now help us take action by demanding that Britain’s top earning executives pay their staff a Living Wage.

FairPensions’ first Living Wage action is pressuring finance companies to become Living Wage employers. Anyone who has a financial product with a FTSE 100 company can take action – and that probably includes you.

Take action at www.activateyourmoney.org

The fault lies with George Osborne

April 28, 2011 dnmufcLeave a comment

The fault lies with George Osborne | David Blanchflower | Comment is free | The Guardian.

The growth figures are disastrous – but so bad there’s no chance of an interest rate rise this year.

In his budget speech last month, Chancellor George Osborne suggested that he was hoping for “an economy where the growth happens across the country and across all sectors. That is our ambition”. Sadly, to judge by Wednesday’s GDP figures, growth under this coalition remains just an ambition, a mere illusion. The British economy has not grown at all over the last six months, it has flatlined and is stagnant, simple as that. In contrast the economy grew by 1.8% over the previous two quarters of 2010, when the previous Labour government’s policies still had a strong influence.

This is not “good news”, as David Cameron astonishingly claimed at prime minister’s questions – where he was accused by the Labour leader, Ed Miliband, of “extraordinary complacency”. In fact it is disastrous. It is time the prime minister stopped the spin and recognised that the government’s economic policies are not working. The sad truth is that the data is going to worsen a lot in the second and third quarters of this year and into next as the austerity measures hit. Over the last six months employment has grown by only 65,000 – far below the numbers needed to compensate for the cull of jobs the coalition has planned. Unemployment is set to rise.

The excuse that the poor performance of the economy was due to the snow has also been put to rest: it is entirely attributable to the coalition’s reckless economic policies. Some coalition supporters in the City have even claimed the numbers just can’t be true and will be revised upwards; but there is still a chance that these numbers will move down if the most recent revisions to GDP data are anything to go by. Since the start of 2007 the average revision has been to reduce growth by 0.1% a month. And if the next quarter’s data is bad, coalition ministers will probably try to blame it on Easter being late, or the royal wedding.

The driving force pulling growth downwards was the construction sector, which decreased by 4.7% – a larger drop than the market expected. Services and manufacturing grew by 0.9% and 1.1% respectively. And government spending increased by 0.7% compared with a decrease of 0.1% in the previous quarter. But this week’s CBI industrial trends survey suggested that growth in manufacturing has reached its high-water mark. The collapse in consumer confidence indicates that the retail sector will not support further growth. And given that the government sector will be a big negative, the future for the economy looks pretty bleak.

The claim that the increasingly awful economic news is all down to Gordon Brown and Alistair Darling, and is not the coalition’s fault, doesn’t seem to be convincing the British public. According to the latest YouGov poll this month, 52% of respondents thought the coalition government is handling the economy badly, compared with 15% in May 2010 and 38% last October.

Even though Wednesday’s data is consistent with many predictions, it is well below the Office for Budget Responsibility’s forecast of 0.8%. The coalition has been in office for nearly a year and they now need to own these GDP numbers. They are Osborne’s fault; the economy slowed sharply because of his incompetence. The whole idea of an “expansionary fiscal contraction” was always “oxymoronic”, as Larry Summers, President Obama’s former adviser, noted at Bretton Woods recently. There is no convincing evidence that such policies have ever succeeded in pulling an economy out of a deep recession.

The only bit of good news is that the job of the Bank of England’s monetary policy committee should now be a lot easier: the poor growth data should take away any possibility of an interest rate rise this year.

In the immediate term, the MPC’s next announcement comes at noon on 5 May, the day of the local elections. My experience of being on the committee suggests that members would be extremely wary of changing rates on such a politically charged day.

At the last meeting, members Martin Weale and Spencer Dale both voted for an increase of 25 basis points, but notably changed their reasoning from “compelling” in March to “finely balanced” in April. The new data release suggests to me that both will now vote for “no change” next month: indeed, it is inevitable that the MPC will downgrade its growth forecast in the May inflation report, which raises the prospect of further quantitative easing this year.

The times they are a changing, but not for the better. It’s time for a rethink, George, if you want to keep your job.

It’s official — we’re not all in this together

April 28, 2011 dnmufcLeave a comment

New Statesman – It’s official — we’re not all in this together.

Workers are taking a pummelling as real earnings fall for all but those in the financial sector, and those at the bottom are being hit hardest

George Osborne. Photograph: Getty Images

I was surprised to discover last weekend that George Osborne feels vindicated by what other countries are doing to address the economic crisis. Apparently, the Chancellor believes there is some similarity between the US economy and that of the UK. Indeed, his words were accompanied by headlines such as “Deficit deniers are trounced”, which appeared in the Daily Mail on 16 April above a piece by Alex Brummer. I would invite the growth deniers to consider the facts.

Since November, unemployment in the US has dropped by roughly one million and the jobless rate has fallen by 1 full percentage point. In the UK, unemployment has fallen by 12,000 and the jobless rate has fallen by a tenth of 1 per cent. US GDP grew by 0.8 per cent in the fourth quarter of 2010 and 2.7 per cent year-on-year, compared to a quarterly decline of 0.5 per cent in the UK and 1.5 per cent on the year. Ignore the empty threats by the Standard & Poor’s credit rating agency to downgrade US debt: America is recovering nicely while the UK is not.

Different strokes

Meanwhile, the Organisation for Economic Co-operation and Development (OECD), which Osborne claims is a big supporter of his austerity measures, is forecasting UK growth of 1.5 per cent and 2.0 per cent for 2011 and 2012, respectively, compared to 2.2 per cent and 3.1 per cent for the US. The Consumer Prices Index measure of inflation in the UK was 4 per cent in March; the comparable figure across the Atlantic was 2.7 per cent. Ed Balls noted this month that the Chancellor is “forgetting that, by taking a steadier approach to secure the US recovery, President Obama now has a growing economy and falling unemployment, which is crucial to getting the deficit down”. As they say, different horses for different courses.

In his 23 March Budget speech, Osborne claimed that “our country’s fiscal plans have been strongly endorsed by the IMF, by the European Commission, by the OECD, and by every reputable business body in Britain”. The IMF has already lowered its forecasts for the UK economy and its boss, Dominique Strauss-Kahn, used some prepared remarks to the Brookings Institution in Washington, DC on 13 April to warn against cutting budgets too far, creating long-term unemployment. “What about fiscal policy? Advanced countries need to put fiscal positions on sustainable medium-term paths, to pave the way for future growth and employment. But fiscal tightening can lower growth in the short term, and this can even increase long-term unemployment, turning a cyclical into a structural problem. The bottom line is that fiscal adjustment must be done with an eye kept keenly on growth.” This doesn’t look much like a trouncing to me.

Another set of numbers worth looking at comes from April’s Office for National Statistics data release. It shows that despite prices rising by 4 per cent, average weekly earnings grew by only 2 per cent overall, while earnings in financial and business services (FBS) rose by 4.5 per cent. So real earnings – that is, earnings adjusted for price rises – for the average worker are falling, but those of bankers and financiers are rising. Average weekly earnings in February 2011 were £448 per week, compared to £596 in FBS, according to the official data.

The definitive source of data on the distribution of earnings is the Annual Survey of Hours and Earnings (ASHE). It surveys a sample of 1 per cent of UK workers – around 200,000 observations a year. The most recent data we have available is for the financial year ending April 2010; this is presented in the table below. The median gross annual earnings were £21,221, a decline of 0.4 per cent from £21,310 in 2009; median gross weekly earnings were £404, up 1.8 per cent from £397 in 2009. I use the median here because it refers to the earnings of a person halfway up the earnings distribution, a measure not pulled upwards by highly paid outliers in each group. (If we were to look at football players’ salaries, for example, the best measure is the median salary, as that is the pay of the typical person: the mean salary will be a lot higher, as it is pulled up by inclusion of all the really high-paid Premier League players.) For the working population as a whole, mean annual earnings in 2010 were £26,510, up by 0.2 per cent from £26,450 in 2009. These are highly misleading numbers, given that the 2010 pay increases were much higher at the top of the wage distribution than at the bottom.

table

A certain ratio

Research I undertook on the “wage curve” with Andrew Oswald for our 1994 MIT Press book of the same name suggests that the pay of those earning the least is likely to be hit hardest by an increase in unemployment. We discovered that, as a rough rule, when unemployment doubles, real wages fall by 10 per cent overall, and by as much as 20 per cent for the lowest-paid. So rising unemployment hits the wages of the lowest-paid the hardest. This is what has happened during the current downturn.

Of particular concern is that earning inequality took a big jump upwards in 2010, in part because of pay freezes in the public sector. A simple measure of inequality is the 90:10 ratio – that is, the relationship between the earnings of someone 90 per cent along the distribution range compared to someone 10 per cent along: the bigger the ratio, the more inequality there is. After rising sharply in the 1980s and 1990s, wage inequality has been roughly flat – in part due to the introduction of the national minimum wage – but it has started to rise again. In 2010, the 90:10 ratio calculated from the ASHE survey for the years 2007-2009 was roughly constant at 6.92:1; but it jumped to 7.16:1 in 2010 (£46,428/£6,480). Evidence from the Labour Force Survey, which is another poll of individuals used to calculate the unemployment rate, also confirms that there was a big increase in hourly earnings inequality, measured by the 90:10 ratio in the fourth quarter of 2010.

Wage inequality is rising. Bankers and financiers are doing well and ordinary workers are not. And then there are all the tax increases and spending cuts that are about to make themselves felt. We are not all in this together.

David Blanchflower is NS economics editor and a professor at Dartmouth College, New Hampshire, and the University of Stirling

FactCheck: Is Lansley misleading us over the NHS?

March 18, 2011March 18, 2011 dnmufcLeave a comment

The claim

“This meeting deplores the government’s misleading and inaccurate talking down of health outcomes in the UK in order to justify its White Paper reforms and Health Bill in England.”

British Medical Association (BMA) Special Representative Meeting to debate NHS reforms in England, Motion 10, March 15, 2011

By Emma Thelwell

The background

Doctors charged the Government today with feeding the public “deliberate unashamed misinformation” in its bid to push through radical NHS reforms.

Almost 400 doctors gathered at the BMA’s first emergency meeting in almost 20 years to vote against the Health and Social Care Bill – and to vote on three separate motions of no confidence in Health Secretary Andrew Lansley.

Mr Lansley, who lost the support of his Coalition partners over the weekend at the Lib Dem conference, has insisted that patients are at the heart of the reforms. He argues that the NHS needs reform on the basis that it lags behind Europe, specifically with poor death rates in cancer and heart disease.

But is the NHS really the sick man of Europe? FactCheck investigates.

The analysis

The whole of Europe “could do better” in the health care stakes, according to latest analysis from the Organisation for Economic Co-operation and Development (OECD).

While no one’s been issued a clean bill of health, the OECD’s summary of the UK’s battle against cancer and heart disease isn’t all bad.

Take breast cancer. It’s the most common form of cancer among all women in all EU countries – accounting for 31 per cent of cancer incidence and 17 per cent of cancer deaths among women in 2008.

The UK screens more women for breast and cervical cancer than most other developed countries and in the OECD’s 2010 Health at a Glance, we ranked third for cervical cancer screening and fifth for mammography screening over the period 2000 to 2008.

Survival rates, however, are less healthy. For both cancers, the UK dips below the European average – the 5-year survival rate for cervical cancer during 2002-2007 was 59.4 per cent – versus an OECD average of 65.7 per cent; and for breast cancer the rate was 78.5 per cent, slightly lower than the OECD average of 81.2 per cent.

But, the OECD points out that survival rates for different types of cancer is improving in the UK.

And data from the Office for National Statistics (ONS) rubber-stamps this; with latest figures showing that the UK survival rate for most of the 21 common cancers improved – for both men and women – over the period 2003-2007 compared with the period 2001-2006.

Furthermore, ONS stats show that the five-year survival rate for women diagnosed with breast cancer during 2003-2007 was 83.3 per cent. This was 1.3 per cent higher than for women diagnosed in 2001-2006

As for heart disease, the official Ministerial briefing for the Bill claimed that, despite matching the French for healthcare spending, our rate of death from heart disease is double theirs.

This claim was repudiated a few months ago by the Kings Fund’s chief economist John Appleby. He said the comparison was made over just one year of OECD figures, and with France – a country with the lowest death rate for “myocardial infarction” – or heart attacks – in Europe.

Mr Appleby pointed out: “Not only has the UK the largest fall in death rates from myocardial infarction between 1980 and 2006 of any European country, if trends over the past 30 years continue, it will have a lower death rate than France as soon as 2012.”

http://blogs.channel4.com/factcheck/factcheck-is-lansley-misleading-us-over-the-nhs/5993

Dr Chaand Nagpaul, the GP representing Edgware and Hendon at today’s BMA meeting, tabled the first motion against Mr Lansley. Dr Nagpaul could not accept what he called the Government’s “plain ignorance” on the NHS’s record.

“Did they really not know that heart disease mortality has fallen more sharply in the UK than any other European nation…Did they really not know that the UK leads Europe in the reduction of breast cancer mortality rates, and that lung cancer death rates in men is actually lower than those in France?,” he said.

The verdict

Since kicking off his case for the “liberation” of the NHS in July, Mr Lansley has repeatedly claimed that “compared to other countries” the NHS has achieved poor outcomes in some areas.

But as he stated himself, the notably poor performances are in areas such as diabetes and asthma – confirmed to FactCheck by the OECD.

The OECD does say that most other European countries achieve higher survival rates for different types of cancer.

Yet, it also acknowledges that our cancer survival rates have improved. Plus, the organisation also tipped its hat to the UK for having a lower number of hospital admissions for congestive heart failure and hypertension than the rest of Europe.

Dr Nagpaul accused the Government of being “so bereft of national pride” that it totally ignores such facts, as well as the findings of the Commonwealth Fund.

FactCheck however, won’t be falling foul to that charge – we’ve read the 2010 Health Policy survey by the US health think tank, which pits the UK against Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the US.

The UK scored highest on confidence in NHS treatment and second only to New Zealand on the quality of care from doctors – with 79 per cent of those questioned rating the care they’d received in the past 12 months from their doctor as very good or excellent.

The NHS isn’t a picture of health, but we’re hardly the worst in Europe. So why is Mr Lansley being such a hypochondriac?

Protesters should not look to once-red Ed for support

March 2, 2011 dnmufcLeave a comment

Ralph Miliband’s theories on Labour explain why his son will be a lukewarm ally for those mobilising in defence of public service

Ed Rooksby

guardian.co.uk, Wednesday 2 March 2011

There’s always a strange sense of unreality in the calm that comes before a political and social storm. The storm we’re facing is set to break in April, when the government’s planned £81bn in public sector cuts will take effect. One doesn’t need clairvoyant powers to predict that such slashing of public services and the accompanying wave of mass redundancies and pay cuts will provoke a surge of social unrest.

Inevitably many people will look to the Labour party to provide organised political support for the emerging movement against the cuts. Many will be hopeful about the prospects for such support given that the Labour leader is considered to be a left-wing figure. Such people are likely to be disappointed. It’s ironic that no one has ever explained more precisely than the leader’s father, Ralph Miliband, why the Labour party is incapable of articulating radical political demands, much less providing a serious challenge to capitalist power structures.

During the Labour leadership contest the media made much of the radical views of the Miliband brothers’ parents. For some quarters seeking to portray Ed Miliband as a dangerous lefty, the fact that his father was perhaps the best known Marxist intellectual in Britain apparently provided “evidence” to back up their tenuous assertions. However, even a cursory glance at Ralph Miliband’s work would have been enough to disabuse them of the notion that he believed that one could be, at the same time, leader of the Labour party and a serious threat to the established order. Ralph Miliband was one of Labour’s most trenchant leftwing critics. In fact, Miliband senior’s analysis of Labour ideology provides us with compelling reasons to believe that Miliband junior will not assist, in any serious way, popular struggles against cuts.

Ralph Miliband produced many seminal works of political theory and political science. Possibly his finest work is Parliamentary Socialism(published in 1961), which explains why the sort of parliamentarism to which Labour is committed means that it can never present a significant challenge to the established order and will, in fact, always function to dampen down rather than bolster any movement that threatens to bring capitalist power into question. There are lessons here for the current political situation.

Ralph Miliband’s main aim in Parliamentary Socialism is to explain why the Labour party simply cannot build socialism and must in practice help to maintain, indeed strengthen, capitalism by “playing a major role in the management of discontent”. It may seem a rather quaint idea in these post-New Labour times that anyone might actually associate Labour with socialism – in this respect Miliband wrote in a very different political climate to the one we inhabit today. But Miliband’s account of why Labour could not be regarded as a serious vehicle for socialist transformation also demonstrates why the party cannot present any sort of meaningful challenge to the powerful, let alone transcend capitalism.

Miliband’s view of socialism, as Hal Draper said of said of Marx’s, “can be most quickly defined as the complete democratisation of society” and this radical expansion of the sphere of democracy would include, centrally, democratisation of the economy. Labourism, however, is based on a much more restricted view of the proper limits of democracy. For labourism the sphere of politics and that of the economy must be kept separate – democratic decision-making should not be extended into the latter sphere and, further, politics must remain the preserve of the parliamentary party. Political activity, in this view, is not about day-to-day deliberation and collective decision-making on the part of ordinary people, but is simply about electing elite representatives to parliament who are then left to get on with the business of government on behalf of, and with little input from, those who have elected them. For this reason Labour has always been suspicious of extra-parliamentary activity, protests, direct democracy and self-organised street and workplace level struggles. Above all, Labour has always been careful to reject industrial action in pursuit of “political” objectives.

Clearly this kind of parliamentarism could never lead to socialism understood as the radical democratisation of society. Further, the party’s horror of extra-parliamentary campaigning and political strike action ensured that Labour would act as a brake on such activity whenever it threatened to occur.

None of this has changed. Few people today see Labour as a vehicle for socialism, but many do see it, and will see it in the coming months, as a vehicle for popular resistance to the cuts. Ralph Miliband’s account of labourism, however, provides good reason to believe that the party will be, at best, a lukewarm ally of those seeking to mobilise in defence of public services and jobs. The leadership of the Labour party will seek to discourage extra-parliamentary mass struggle or, at least, to keep this struggle within manageable limits. It is far more interested in appearing respectable, credible and responsible in the eyes of the media, the CBI, the financial markets and Middle England than it is in providing assistance to a militant anti-cuts campaign. Indeed one of “Red Ed’s” first announcements upon becoming leader was to proclaim that he would have “no truck” with “irresponsible strikes“.

This is not to say that anti-cuts campaigners should steer clear of Labour altogether. Many ordinary party members will throw themselves into the heart of the campaign and, indeed, admirable figures such as Tony Bennand John McDonnell are already deeply involved. The Labour leadership can be pushed leftwards by mass pressure – it cannot be seen to stand wholly aloof from a movement in defence of public services. Nevertheless there are limits to how far the leadership will be prepared to go. Already Ed Miliband is seeking to maintain a delicate balancing act between appearing to be broadly supportive of a respectable campaign against the cuts on the one hand, without looking too much like a radical on the other. It seems, for example, that he will be speaking at the rally after the TUC’s March for the Alternative, but will not attend the march itself. Marching, one imagines, would not look like the sort of thing a responsible political figure would do.

Those who want to fight these cuts have much to learn from what Ralph Miliband had to say, without knowing it at the time, about the limits and constraints of his son’s politics.