Britain’s livelihood crisis: A permanent way of life?
It’s now over a year since the end of Britain’s most recent recession, but for many households the pain continues. In fact the financial hardship that some families currently face is greater than in the depths of the downturn. The Government’s own forecasts show that wages are going to trail behind inflation for several years to come, while household debt will continue to rise.
For those on middle and low incomes who were experiencing a wage squeeze before the recession even started, a return to business as usual is unlikely to bring any significant rewards. On the contrary, as stagnating wages are accompanied by tax rises and cuts in the benefits and tax credits available to working families life is set to become even more of a struggle.
The wages of middle income Britain have grown by an average of just 56% since 1978, despite GDP increasing by 108% over the same period. For workers in some skilled trades incomes actually fell in real terms between 1978 and 2008.
For those out of work the picture is also grim. While unemployment levels remain below those of the 80s and 90s recessions, close to 2.5 million working age adults are unemployed and several million more are out of work and want a job. With growth rates held down by Government austerity, those without work are facing a highly uncertain future.
The crisis isn’t just happening in Britain’s workplaces. Services and support for children and young people, from Sure Start centres to universities, is being cut back. People are finding it harder than ever to own their homes. And as the retirement age rises tomorrow’s pensioners are faced with paying more for their care with far less generous workplace pensions. For the first time in many years, we are facing the very real prospect of a sustained cut in our living standards.
These problems are not simply a consequence of the global downturn. The fact is that while a few at the top have seen great benefits the UK’s move from welfare to market capitalism has not brought rewards for the majority.
Levels of investment in productive business are low, average growth rates have declined and economic shocks are now more frequent and severe. Before the recession began Britain was a low wage, high debt and increasingly unequal nation. Government austerity is now simply set to make things worse. Without a radical re-think Britain’s livelihood crisis is set to become a permanent way of life.
Of course we don’t want to go back to the 1970s – but we do urgently need to think about how Government, business and unions can work together to make markets work better. We know that simply tinkering won’t create the inclusive, productive and high quality new economy we need.
Our new Touchstone Pamphlet, “Britain’s Livelihood Crisis”, authored by Stewart Lansley, sets out some of the changes that could start to take us there.