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Low Pay Is Fast Becoming a Defining Challenge of Our Age

James Plunkett

This post originally appeared on the Huffington Post

You can tell a lot about a downturn by the image that comes to define it. From queues outside job centres in the 1970s and early 1980s to the poll tax riots that preceded the early 1990s recession, the pictures that stick in the mind have a habit of reflecting the key economic and political challenge of the time. So what will be the iconic image this time around? Images of last summers' riots will undoubtedly endure. But the more representative picture of the squeeze so far would be much less dramatic: a low paid, part-time worker, struggling in to work each day, bringing home a wage that barely pays the bills.

Today's new figures from the ONS confirm what's been suspected for some time: low pay is fast becoming one of the defining economic challenges of our age.

Giselle Cory

There has been a lot of discussion of inflation lately, as prices continue their upward march. The consumer trends data out today from ONS gives us an alternative way of looking at inflation. It shows that we are spending more and getting less on essentials like food, housing and transport. This is shown in the chart below, where solid lines show the amount we are buying and dashed lines the amount we are paying for it (effectively real terms versus cash terms consumption).

Anna Vignoles

Successive governments have certainly placed skills policy at the heart of strategies to raise living standards and tackle low pay. Yet now there are growing doubts about whether upskilling workers will be enough to bring about genuine improvements in the living conditions of people currently on low to middle incomes (LMIs). In a new paper for the Commission on Living Standards, hosted by the Resolution Foundation, I re-examine the links between skills, the changing labour market and wages, arguing that in the long run, skills policy has a crucial role to play in equipping LMIs to thrive in the modern labour market.

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Two years into the life of the coalition and all the sudden the passing of time seems like Ed Miliband’s best friend and David Cameron’s worst foe. For a government that has lost its footing, facing an opposition learning how to benefit from the stumbling and fumbling, the long expanse of time left in this parliament will be starting to feel less like an opportunity to develop and deliver an agenda and more like an ordeal to be survived.

It’s not just the slow motion horror of the six weeks since the budget or the likelihood that the next few weeks, dominated as they will be by the Leveson inquiry, will feel like a very long stretch indeed for Jeremy Hunt and David Cameron. It’s the six budgets and autumn statements the coalition parties have to negotiate before the next election; the thirty seven months of enervating governing grind to get through; and the fact that come the next election it will have been a full 23 years since the Conservatives won outright, an observation that is weighing increasingly heavily on the Tory ranks who sense their prospects of doing so next time aren’t brightening. A lot of politics is still to happen even before the parliament reaches half-time – and the second half is littered with all manner of political, economic and legal icebergs.

Food and fuel prices will be key to inflation in the year ahead

James Plunkett

This post originally appeared on Left Foot Forward

Today’s ONS inflation statistics presage what will be one of the few positive economic stories this year

Backed by strong discounting from retailers, RPI fell from 5.2 per cent in November to 4.8 per cent in December, while CPI fell from 4.8 per cent to 4.2 per cent, its largest one month drop since December 2008.

Stressed-out-by-inflationThat of course means inflation remains at more than twice the level of its Bank of England target. Nonetheless, future months are likely to see further falls, bringing welcome relief to real household disposable income.

Labour needs an argument about the state not just the deficit

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Following last week's media storm about the season's new East-end duo, Abbott and Glasman, the real business of politics will get back underway this week. And if the weekend's reports are anything to go by it will see Labour moving to a more muscular position, or at least tone, on deficit reduction.

The new year strategy is set to play down the importance of spending levels to the next phase of centre left politics as it talks up other routes to social justice. "We can't spend our way to the new economy", as Ed Miliband likes to say. The intellectual effort required by Labour to carve out what it sees as a progressive austerity agenda will be every bit as demanding as that required in the 1990s to reclaim fiscal prudence.

Women’s work – an opportunity for growth we can’t afford to pass up

James Plunkett

This post originally appeared on Left Foot Forward

As economic forecasts continue to head south, it’s worth pausing to ask a simple question:

Where exactly do we expect future growth in living standards to come from – even once a recovery takes hold?

The list of possible answers to that question isn’t long. In fact, when it comes to household income growth, there are effectively four:

    • Pay could grow faster than inflation

    • We could all work longer hours

    • More of us could work; or

    • The state could get more generous

Goodbye to the good life

Gavin Kelly and James Plunkett

This article originally appeared in Prospect

In the three months from July to September, Britain’s economy actually grew—by 0.5 per cent. That performance was less bad than many had feared, and some have seized on it as a source of hope. For Chancellor George Osborne it was a “positive step… laying the foundations for the future success of the country.” Even Bank of England Governor Mervyn King, hitherto the nation’s self-appointed prophet of economic doom, recently said that the squeeze “is now beginning to come to an end.” Whether or not such sparks of hope prove justified, they obscure a much bigger question: even if the economy recovers, will living standards improve?

Getting from economic bingo to a growth plan

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

The last week has produced a bumper crop of economic reports and statistics - resulting in a form of daily economic bingo - which will define the political and economic debate for the rest of the autumn and set the scene for the run into 2012. It's a week that has sharpened the economic and political challenge on growth - not just for the Coalition, but for Labour too.

It kicked off with Incomes Data Services grabbing the headlines with their finding that this year there has been a near 50 per cent increase in total remuneration for FTSE 100 directors - a hike that dwarfs the 2.3 per cent increase in average earnings, or the 4.5 per cent annual rise in the FTSE 100.