Netflix subscriptions and union cards in lockdown Britain Top of the Charts 29 May 2020 Torsten Bell Afternoon all, I see we’ve spent the week discussing optimal eye testing strategies, and introducing chunks of the country to the beauty spots of the North East. Good news for the tourism industry of County Durham in the long run, but a catastrophe for getting a grip in the midst of this crisis. Well done us. Top job Britain. On the plus side from Monday (in England) you’ll be allowed to meet up with five of your mates for socially awkward distanced walks/BBQs. And if you haven’t got five mates don’t worry – a solo BBQ with TOTCs to read is an afternoon well spent. Have a good weekend, Torsten Chief Executive Resolution Foundation Time out. You can summarise lockdown Britain in four words – less pub, more zoom. But new data this week gives more detail on how the change is playing out. The cheerier ONS take shows that people are traveling over an hour less a day, and using that time to garden, sleep and watch more Netflix (three hours a day!). The ONS take a positive view on the gender-equality side of things too: gaps between men and women on childcare and household work have fallen. A less positive take comes from an IFS paper which finds gender gaps on work are up, with previously-working mothers nine percentage points less likely to be in paid work than fathers. Mothers are also doing far more childcare, and being interrupted far more when they are working. A key difference between the reports is that while the ONS look at everyone, the IFS focuses on parents who, to be blunt, are being stuffed at present. This isn’t just about schools closing either: those aged 60+ have, for good reason, reduced childcare by 90 per cent. So, it’s the motherload rather than just gender making the big difference. Germany’s softening. The EU is gearing up for some big spending. On Wednesday the Commission presented proposals for a €750 billion coronavirus recovery fund following the recent splurge-friendly joint Merkel-Macron announcement last week. Now it’s yet to be approved by all 27 states – but it’s worth reflecting quite how far Germany has come in this debate. This great explainer from Caroline de Gruyter is worth your time – providing a non-technical history of how the German shift towards a softer attitude to spending is not just a reaction to coronavirus, but has been brewing for a while. In particular, there’s been a longer-term shift in German economics and politics away from a hardline version of the ‘Schwarze Null’, or commitment to keep the budget in surplus. Worker power. Why has the US seen weak wage growth, rising profits and lower unemployment over recent decades? These are old questions as we face Covid-19, but they are still crucial ones. A recent paper from Harvard giant Larry Summers and Resolution collaborator Anna Stanbury returns to an old argument: these trends can largely be put down to declining worker power in the US (Twitter summary). The authors rightly note that this pushes back against the recent fashion of focusing on globalisation or increased firm market power as the drivers of these trends. Oh, and worker power is up (a bit) on this side of the Atlantic! This week we learnt that trade union membership is up 90,000 last year – the first time this century we’ve seen two years of increase in a row. The youth are joining up, with those born in the late 1990s more likely to be trade union members at the age of 24 than the generation before them. Moving on. I know we’re all meant to be moving on from this week’s Cummings-fest – which is probably good for everyone’s sanity (less so on the accountability front). But before we do check out a new blog from Paula Surridge for a view on the lasting impact. She focuses on how much votes agree or disagree with statements from the British Social Attitudes survey relevant to Barnard Castle gate: ‘There is one law for the rich and one for the poor’, and ‘The law should be obeyed even when a particular law is wrong’. On the first statement, 58 per cent of us agree, unsurprisingly a higher proportion among Labour voters, but joined by nearly half of Leave-voting Conservative voters. A slightly lower proportion of us agree with the second statement – around 40 per cent – but this includes nearly half of Conservatives. So maybe the PM asking everyone to apply their ‘common sense’ to the saga isn’t a good idea when events clash with their existing values – particularly many of those voters who delivered the Conservative majority last year. Swedish exceptionalism. You’ll have heard lots of chat about the Swedes’ more relaxed coronavirus response, generally as a shockingly stark line on a chart comparing coronavirus mortality rates to neighbouring Norway and Denmark. But rather than just shaking heads at what’s happened (which, as Chris Giles and John-Burn Murdoch has painfully shown, we’re not exactly in a strong position to do) the interesting question is why has Sweden followed such a different lockdown approach. A recent paper from Swedish economists gives some clues – setting out the case for a more lenient lockdown given the hit to wellbeing/the economy from hard lockdowns can exceed that of the virus. With some impressive pure utilitarianism, the study finds that the ‘welfare-cost’ of a one-month lockdown corresponds to falls in GDP that could be roughly correlated to 29,600 ‘life years’ across the population, or between 3,700 and 8,000 fatalities. Whatever you think about the ‘Swedish experiment’ it’s good to understand where the logic for it is coming from. Chart of the Week The Job Retention Scheme is popular (eight million+ jobs), generous (paying 80 per cent of wages) and expensive (£50 billion+). But it is not here to stay – with the Chancellor imminently setting out plans for its phase out. It is almost inevitable that this will lead to a second wave of unemployment, which is why we’ve focused on Universal Credit, the system that will be providing the lasting living standards safety net during this crisis, in a major report and webinar this week. UC has stood up well to the unprecedented surge in new claims, but workers moving off the JRS and onto UC in the months ahead are going to face a very big shock, as COTW illustrates. Employees on the JRS on average only see a 9 per cent income hit compared to continuing to work – but moving onto UC involves a 47 per cent drop. The hit is even bigger for young adults who lose over two-thirds of their income (we increasingly don’t like letting young people have access to benefits in the UK). Families might be able to cope for a while on that lower income – but this is a recipe for serious hardship for many in the months ahead.