Transcript Making the case for a fair recovery

Making the case for a fair
recovery
Nicola Smith
Head of Economic and Social Affairs, TUC
Introduction
•
•
•
•
•
Current state of the economy
Implications for services and spending
Is there any other choice?
What do the public think?
Arguing for an alternative
State of the economy
The economy is finally growing
Quarterly GDP growth rates, ONS
Although it remains the slowest
recovery on record
The profile of recession and recovery, NIESR
There are also concerns about how
sustainable the recovery is
George Osborne, 25th Feb 2010:
“The recovery will only be sustainable if it is
accompanied by an internal and external
rebalancing of our economy: in other words a
higher savings rate, more business investment,
and rising net exports”
With little evidence of ‘rebalancing’
GDP by expenditure, TUC Economic Quarterly
1.5
1
0.5
0
-0.5
-1
-1.5
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Private Consumption
Government Consumption
Gross Fixed Capital Formation
Net Trade
Q3 2013
While household spending is increasing,
real earnings are not
Contributions to annual growth in real earnings, TUC
15.0
10.0
5.0
0.0
-5.0
-10.0
-15.0
Total Pay
RPI Inflation
Real Earnings
Oct
Jul
Apr
2013 Jan
Oct
Jul
Apr
2012 Jan
Oct
Jul
Apr
2011 Jan
Oct
Jul
Apr
2010 Jan
Oct
Jul
Apr
2009 Jan
Oct
Jul
Apr
2008 Jan
Oct
Jul
Apr
2007 Jan
-20.0
Jobs improvements are welcome
ILO unemployment, TUC
2,700
2,650
2,600
2,550
2,500
2,450
2,400
2,350
2,300
2,250
2,200
2,150
But under-employment remains high,
although levels are starting to fall
Involuntary temporary and part-time work, TUC
1,500
680
1,480
660
1,460
1,440
640
1,420
620
1,400
1,380
600
1,360
580
1,340
1,320
560
1,300
1,280
540
Could not find full-time job
Could not find permanent job
The jobs market has changed since
2008 with more part-time work
Part-time and full-time work, TUC
22,200
8,200
22,000
8,000
21,800
21,600
7,800
21,400
7,600
21,200
21,000
7,400
20,800
7,200
20,600
20,400
7,000
Full-time
Part-time
There has also been some change in
jobs levels in different sectors
Change in workforce jobs, Sept 2008 – Sept 2013 TUC
Professional scientific & technical activities
Human health & social work activities
Administrative & support service activities
Education
Real estate activities
Information & communication
Arts, entertainment & recreation
Electricity & gas
Water supply, sewerage & waste
Accommod-ation & food service activities
Financial & insurance activities
Transport & storage
Wholesale & retail trade
Public admin & defence
Manufacturing
Construction
-400
-300
-200
-100
0
100
200
300
400
500
Some groups are now at particular risk
of poorer outcomes
Employment rates for different groups, Inclusion
80
75
70
65
60
55
50
45
40
35
Working age 16-64
Disabled
BME
50-64
Lone parents
No qualifications
Level 1
YP NFTE
What does this mean for services
and spending?
Growing economy means that public
finances are improving
Public finances, ONS
But most of the spending cuts in
services and benefits are still to come
Green Budget 2014, IFS
And public sector employment is set to
fall further
General Government Employment forecasts, OBR
6.00
5.80
5.60
5.40
5.20
5.00
4.80
4.60
4.40
4.20
4.00
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
Is there any other choice?
What choices does government have?
• Far more than they suggest!
• We need to consolidate the public finances, but many
unknowns:
– How much capacity has been lost?
– How sustainable is the recovery?
• And governments have choices:
– Speed of consolidation
– Balance between tax and spending
– Discretion over tax cuts
There are also wider policy choices
that could deliver a fairer recovery
• Employment protection legislation
– Unfair dismissal protection
– Rights for casual workers
• Strengthening the minimum wage and tackling high
pay
• Fairness in social security
– We don’t need the current sanctions regime
• Tax evasion and avoidance
– How strong is the anti-avoidance strategy?
• Corporate governance and company decision making
– Are firms being made to invest for the long-term?
So what do the public think of
the current approach?
A consistent majority think the cuts
have been unfair
You Gov tracker polls, TUC analysis
Although a majority also think they are
necessary
You Gov tracker polls, TUC analysis
The proportion who think the cuts are
too deep has been falling
You Gov tracker polls, TUC analysis
As has the proportion who think the
cuts are being implemented too fast
You Gov tracker polls, TUC analysis
Public do not back plans for a
permanently smaller state
TUC You Gov poll
90
80
70
60
50
40
30
20
10
0
Total
Con
Yes
Lab
No
Don't know
Lib Dem
And do not think gains of growth will
be
fairly
shared
TUC You Gov poll
90
80
70
60
50
40
30
20
10
0
All
Expect gains will be shared
Con
Labour
Expect the usual suspects will benefit
Lib Dem
Neither
Public support social security safety
net
GQR polling for the TUC
Particularly for people in work
TUC You Gov poll
90
80
70
60
50
40
30
20
10
0
All
Con
Support 1 per cent uprating cap
Lab
Lib
Support when realise it affects people in work
Lots of misinformation about benefits
TUC You Gov poll, responses on proportion of benefits bill people think spent
on JSA
50
45
40
35
30
25
20
15
10
5
0
All
Con
Lab
Lib Dem
Actual
Few people think they have gained
from the economic recovery
MORI poll on extent to which people think growth has benefitted their living
standards
So what should progressives be
arguing for?
What might a fairer recovery look like?
• Gains of growth that are more fairly shared
– Better jobs (better balanced recovery and rights at work)
– Fairer pay (at the bottom and at the top)
• Super-rich paying their fair share
– Fair tax
– Banks and big business held to account
• Vital welfare safety net retained
– Protection for those who have contributed
– A system that is fair
• Against permanent public service cuts
– Childcare, social care, hospitals, schools vital to help
households and boost the economy
Over to you!
Thank you!
[email protected]