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Why Britain Needs A Pay Rise

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Frances O'Grady, TUC General Secretary.

Quote: '

The statistics may tell us that growth has returned and that we are in the middle of a recovery, but it doesn't feel like that. Across the workforce – except at the top – wages still lag behind the cost of living. Unemployment may be relatively low, but job quality is too.

After the crash everyone agreed that we needed to rebalance the economy. But it has not happened. So far, growth has more to do with consumer spending on the back of house-price inflation than investment, exports and wealth creation. Instead we seem to be rebalancing the workforce. The good jobs that went in the crash have been joined by the victims of austerity economics as public servants have got the boot or not been replaced, even while their pay is driven down. No wonder NHS staff have joined local government workers and teachers in industrial action ballots.

For sure, some decent jobs have been created, but far too few. Insecurity and low pay are the new normal. Many want full-time work but are stuck part-time. Others live hand to mouth on zero-hours contracts or agency work. Many work in jobs that fail to use their skills and talents. Others work very long hours to make ends meet. Self-employment has grown, some fulfilling but some bogus – and much poorly paid.

Some economists and business leaders talk of a productivity puzzle – they cannot work out why we are not producing more, given our high employment levels. But there is no great mystery. It is the obvious result of too many low-pay, low-skill and low-productivity jobs in low-investment workplaces. The same business leaders talk up what they call labour-market flexibility, but it drives a vicious circle of a low-commitment economy that fails to put decent wages into consumer wallets or a good tax take into government coffers' [more at link]

http://www.theguardian.com/commentisfree/2014/aug/30/low-pay-frances-o-grady-tuc-commentary

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And in the longer term we need to genuinely rebalance the economy using industrial policy, skills, infrastructure and low carbon-investment, and regional policy.

At least she got the bit about "we need to genuinely rebalance the economy" correct.

The ways to do it (industrial policy, skills, infrastructure and low carbon-investment, and regional policy) need amplifying to say the very least - even glib Dave would likely list those points.

"Using industrial policy" could mean almost anything.

"Skills" - the UK has plenty of that.

"Infrastructure" - the UK has plenty of that.

"Low carbon investment" - that needs amplifying as well but how many solar panel call centres, windmills etc etc does she want.

"Regional policy" - the UK has plenty of that.

According to the article (and as usual) nothing mentioned about how crazy house prices/crazy land prices influence the economy, employment and wages, everything etc and what to do about that problem. Apparently nothing about the rapidly increasing population and the associated congestion.

They might as well return any remaining members' fees.

Edited by billybong

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I lost interest when I read the TUC heading at the top...

But you could put Association of British Bankers across the top and millions would believe it.

Edited by 1929crash

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Why britain needs a paycut more like.....public sector and real tax payer back industries need to take a massive cut on their incomes. The rest of us can't support the massive communist state we now have.

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But you could put Association of British Bankers across the top and millions would believe it.

Indeed. I recall when unions (plausibly or not) were accused of wrecking the economy. I'd say that these days, the wreckers are not unions but management or in particular, bankers.

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If inflation had been properly kept under control - both consumer price inflation and house price inflation - then quite good salaries would still be quite good. This is what 15 years of fiddling the figures and cheering asset price inflation gets you.

I am not at all in favour of making up the 'gap' by inflating wages in turn, as it simply makes the money I've toiled away to save more worthless than it already is. The last decade of working but not owning a house really will become a personal 'lost decade' - stolen from me by the bastards in charge of the economy. Remember you only get maybe five or six in your lifetime.

Pressing for more inflation to solve problems caused by inflation is rather perverse.

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Why britain needs a paycut more like.....public sector and real tax payer back industries need to take a massive cut on their incomes. The rest of us can't support the massive communist state we now have.

Very difficult to generate any real increase in earnings in the private sector at the moment except via massively increasing productivity....we can't buck a global deflationary trend. Government may seek to try and get spending power into the public hands via increasing state pension, welfare and public sector wages. However, it gets to the stage where the self employed and employees in the private sector will just throw in the towel because the rewards no longer merit the effort. ie. if you can't beat those who rely on taxation receipts you will join them.

End game of this Hollande style 'experiment sociale' is the economy collapsing.

Edited by crashmonitor

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Very difficult to generate any real increase in earnings in the private sector at the moment except via massively increasing productivity....we can't buck a global deflationary trend. Government may seek to try and get spending power into the public hands via increasing state pension, welfare and public sector wages. However, it gets to the stage where the self employed and employees in the private sector will just throw in the towel because the rewards no longer merit the effort.

very difficult to generate an increase in earnings (aka labour) when it is taxed (employer/employee ni, income tax) when it is taxed behaviourally as a scarce commodity when patently for a couple of generations its clearly an abundant commodity

Tax has 2 functions

Firstly it is a way of funding the state, but more importantly its a behavioural determinant

Taxation globally to greater and lesser extents have in this cycle been collected on a surplus as if its a scarcity (and people scratch their heads why the surplus has remained for 50 years)

Meanwhile theres the very existence of this site wondering why Land speculation captures all investment when it is taxed at the square root of fck all 20bn Council tax +4Bn stampduty minus 25 Bn H Benefit.

Fantastically the govt has driven all tax and investment behaviour into land speculation whilst penalising labour speculation and this site wonders (blaming left or right whatever they are) why theres been generational underinvestment in Labour (aka unemployment) and generational over investment in land speculation (aka houseprices)

Edited by Georgia O'Keeffe

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very difficult to generate an increase in earnings (aka labour) when it is taxed (employer/employee ni, income tax) when it is taxed behaviourally as a scarce commodity when patently for a couple of generations its clearly an abundant commodity more than ever

Tax has 2 functions

Firstly it is a way of funding the state, but more importantly its a behavioural determinant

Taxation globally to greater and lesser extents have in this multigenerational cycle been collected on a surplus as if its a scarcity (and people scratch their heads why the surplus has remained for 50 years)

Meanwhile theres the very existence of this site wondering why Land speculation captures all investment when it is taxed at the square root of fck all 20bn Council tax +4Bn stampduty minus 25 Bn H Benefit.

Fantastically the govt has driven all tax and investment behaviour into land speculation whilst penalising labour speculation and this site wonders (blaming left or right whatever they are) why theres been generational underinvestment in Labour (aka unemployment) and generational over investment in land speculation (aka houseprices)

Of course the TUC arent interested in addressing this fundamental behvioural driver, theyre only interested in someone else paying for their beliefs (when it comes to the behavioural inconsistencies being addressed they couldnt give any more of a fck than this govt or any other power vacuum)

Edited by Georgia O'Keeffe

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Very difficult to generate any real increase in earnings in the private sector at the moment except via massively increasing productivity....we can't buck a global deflationary trend. Government may seek to try and get spending power into the public hands via increasing state pension, welfare and public sector wages. However, it gets to the stage where the self employed and employees in the private sector will just throw in the towel because the rewards no longer merit the effort. ie. if you can't beat those who rely on taxation receipts you will join them.

End game of this Hollande style 'experiment sociale' is the economy collapsing.

So you're arguing for wage increases in the private sector then. Same as the OP.

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very difficult to generate an increase in earnings (aka labour) when it is taxed (employer/employee ni, income tax) when it is taxed behaviourally as a scarce commodity when patently for a couple of generations its clearly an abundant commodity

Tax has 2 functions

Firstly it is a way of funding the state, but more importantly its a behavioural determinant

Taxation globally to greater and lesser extents have in this cycle been collected on a surplus as if its a scarcity (and people scratch their heads why the surplus has remained for 50 years)

Meanwhile theres the very existence of this site wondering why Land speculation captures all investment when it is taxed at the square root of fck all 20bn Council tax +4Bn stampduty minus 25 Bn H Benefit.

Fantastically the govt has driven all tax and investment behaviour into land speculation whilst penalising labour speculation and this site wonders (blaming left or right whatever they are) why theres been generational underinvestment in Labour (aka unemployment) and generational over investment in land speculation (aka houseprices)

You can alter the distribution of tax (and incomes) without increasing tax overall.

Clearly the problem is that the rewards have gone to the wealthy (incomes and capital).

The solution is obvious - incomes (and capital) needs redistributiing more equitably.

Markets have failed (the vast majority)

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You can alter the distribution of tax (and incomes) without increasing tax overall.

True. Not sure about the incomes part though.

Clearly the problem is that the rewards have gone to the wealthy (incomes and capital).

No it is not clear. What do you mean by wealthy? Where does wealthy start? The truly wealthy people that I know are not big spenders, they mostly invest their money which in turn creates more jobs. The idea that rich people live these luxurious lifestyles is a myth. There is a limit to what you can spend money on to make yourself happier. Most wealthy people know this and this is why they invest their surplus cash and also give money to charities.

The solution is obvious - incomes (and capital) needs redistributiing more equitably.

It is not obvious. What does more equitably mean? Who decides what is equitable? What someone earns is between them and their employer. Would you like it if your money was redistributed to poor people in the Sudan?

Markets have failed (the vast majority)

Which market? Constant interference by the governement and the central bank has caused markets to become inefficient (http://en.wikipedia.org/wiki/Government_failure). It is a bit strange that you moan about market failure, but then advocate for more government which is causing the market failure.

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Plenty of firms are generating plenty of money, there is more than enough to go round.

The system, be it the stock market or the tax system encourages that money to be stored and not used.

Globalisation and the push for ever greater profits, will just push wages lower, how this can be reconciled with high rents and house prices remains to be seen.

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No it is not clear. What do you mean by wealthy? Where does wealthy start? The truly wealthy people that I know are not big spenders, they mostly invest their money which in turn creates more jobs. The idea that rich people live these luxurious lifestyles is a myth. There is a limit to what you can spend money on to make yourself happier. Most wealthy people know this and this is why they invest their surplus cash and also give money to charities.

Umm that is exactly the point.

It is not investment that creates jobs but rather demand. Investment is the means by which that demand is facilitated and those jobs are filled. We can see this plainly by looking at our own economy and the way that hiring has picked up due the housing bubble creating more debt based demand for goods and services.

There is a balance that needs to be struck between money going to demand (wages) and fulfilling that demand (investment). Over the last 30 years the ever rising share of the worlds income going to the elites has toppled that balance. It has been possible to bridge the gap (worldwide) via debt, but that can only work temporarily and now with debt saturation the limit to which debt can be used to stoke demand has been reached. The only way our system can function going forward is thus via a substantial rebalancing towards wage based demand.

So yes it is clear that the underlying problem is that the rewards have gone to the wealthy (incomes and capital) - though they will never ever admit it.

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we dont need more wages just NO government "help" for the housing market and the bankers.

DAVE...STOP HELPING US.

He's helping himself, really.

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