This week, two pieces of economic news served as caveats to Britain's apparently positive economic growth. A Credit Suisse report found that Britain is the only G7 nation with wider inequality than it had at the turn of the century, and the latest ONS figures found that wages are rising below inflation. As has been the case for much of this year, people in Britain are asking with increasing urgency why they do not feel a benefit from our supposedly revitalised economic fortunes.
Growing divisions
As the economy finally begins to recover, the majority of British families continue to feel the squeeze. Family incomes can’t keep up with the cost-of-living, as household bills for everyday basics, like food, energy and transport, rise. Wage increases for most have fallen far behind inflation. And the financial support that helped to keep families afloat, such as tax credits, has been eroded. Yet the very wealthy are immune from this. Our country is becoming more unequal, as the divide between the privileged few and the rest of us continues to grow.
Kate Green, Labour Chair of the All Party Parliamentary Group on PovertyEmployment not productivity
It is not quite true to say that British people are not benefiting from growth. More people are moving into work and their living standards will be improving as a result. However, the growth is coming from increased employment and not the increased productivity of those already in employment. As such, real wages are stagnant. There are many reasons for this. For example, the fall-out of the financial crisis led to low investment, and increased regulation and government spending have probably reduced productivity. To add to the misery, the financial crash took place against the background of higher commodity prices (a trend which is, thankfully, now reversing).
Philip Booth, Editorial and Programme Director at the Institute of Economic AffairsLook past growth
In terms of real well-being, it's crucial not to separate measures of growth from measures of equality—seen in terms of social agency and dignity. It's too easy to look to overall indices of economic growth—perhaps to say, as the latest news might encourage us to, that it could be worse—while ignoring the signs that an increasing number of citizens, not least the young, have reduced social and economic security and a reduced sense of what our democracy can deliver for them. This is to store up serious challenges for the future.
Dr Rowan Williams, former Archbishop of CanterburyPolitics of grievance
1) Because the variety of capitalism to which we’re hitched privileges the 1 per cent at the expense of everyone else, and the instruments we once had to ensure a fairer distribution of rewards—trade unions, chiefly—are but a shadow of their former selves. 2) Because Britain is awash with the politics of grievance, bitterness and disconnection, and people are not in the correct frame of mind to feel the “benefit” of anything, let alone a revival of the business model that has laid waste to their high streets, endlessly disrupted their home environments, put home ownership beyond their children’s reach, and offered them precious little material benefit by way of compensation. Which brings us back to (1).
John Harris, author and Guardian columnistProtect people in work
The answer is obvious: far too many of the new jobs created are poorly paid, and the wages of those in work have been cut. Like elsewhere in the public sector, since 2010 hundreds of thousands of civil servants have faced a two-year pay freeze and subsequent years of a 1 per cent cap. Well below inflation, even by the government's preferred—but fundamentally flawed—measure of Consumer Price Index. This has apparently been done to "protect jobs", but in the same period 87,000 civil service posts have gone. Until we keep people in work, pay them a living wage, and stop giving millionaires tax cuts, we will not see a recovery for all.
Mark Serwotka, Director of the Public and Commercial Services Union
