Rich and poor: the gap widens

Submitted by Matthew on 22 March, 2017 - 11:23 Author: Editorial

“If nothing is done to change [the] outlook, the current parliament [2015-20] will go down as being the worst on record for income growth in the bottom half of the income distribution. It will also represent the biggest rise in inequality since the end of the 1980s”. So concludes an analysis on 16 March, by Adam Corlett of the Resolution Foundation, of the latest official figures on low incomes, published the same day.

The toxic mix comes from low wage growth — which the government’s own Office for Budgetary Responsibility predicts — and a great wave of pre-programmed cuts in working-age welfare benefits.

Where George Osborne proclaimed a squeeze on the poor with brassy confidence, and then in practice eased off here and there, the May government feigns concern for the worse-off but adds to Osborne’s legacy only such measures as ferocious planned cuts in school budgets. The percentage of children living in poverty, which rocketed from 18% to 33% in the Thatcher 1980s, then decreased from 34% to 27% in the Blair-Brown years, has been rising steadily since 2010 and is set to rise further. Meanwhile profits are rocketing.

The rift between the worse-off and the top 1% is increasing faster than the gap between us and the routinely-prosperous top 10%. The grinding increase in inequality has cumulative effects. Death rates have been falling for decades. But then about 30,000 more people died in 2015 than in 2014, a 5.6% increase. That is the biggest annual leap for 50 years. January 2017 saw another peak almost as high as that in 2015. And no recent winters have been specially cold.

Academic researchers collating the figures say they can’t be sure the rises are not blips, but they think they’re a trend caused by the cuts in health and social care. The estimated number of homeless on the streets in England has increased each year since 2010. The autumn 2016 total was more than twice as high as 2010’s.

A recent wide-ranging study of inequality within countries across world history by the US researcher Walter Scheidel finds, bizarrely at first sight, that inequality within countries is almost always either high or rising. In class societies, including capitalism, political and economic power boost each other and pass down generations. Only some periods go against the grain, and chiefly not happy ones: great breakdowns of society, where the rich fall further than the poor.

The new strength of trade unions in the richer capitalist countries stopped inequality increasing for a generation after 1945, but did not really decrease it. Then, in the 1980s, the neoliberal, union-battering, market-worshipping assault of Thatcher and Reagan pushed inequality up again. Inequality continued to rise under New Labour, only more slowly, and mostly between us and the very top incomes, with some modest relative improvements for the very worse-off. Now the inbuilt dynamics of capitalism are being mobilised again, helped on by the government, and by a long period of world capitalist depression.

Unions must rebuild. And labour-movement political activists must set their sights, not on palliatives like New Labour’s, but on the replacement of the whole mechanism of class exploitation by a cooperative commonwealth.

Public sector pay slumps

The Resolution Foundation, in research published on 15 March, finds that public sector pay is set to continue to fall.

Adjusted for inflation, the average salary in the public sector by 2019-20 will be no higher than it was in 2004-2005, and £1,700 lower than in 2009-10.

Average real earnings now stand at £23 a week less than at their pre-crisis peak. Both PCS and Unison have called for an end to the public sector pay freeze, but done little to mobilise in action.
Recent ballots nationally in Unison have had turnouts that would see no action likely under the new Trade Union Act.

PCS general secretary Mark Serwotka says: “There is now an overwhelming and unarguable case to end the public sector pay cap to prevent a further decline in living standards in the coming years. All the analysis shows wages across the economy are stagnating, but the government can kickstart
the revival by lifting the 1% cap in the public sector.”

Some other sectors, notably “professional, scientific and technical”, also have slumping pay. The main exception is “finance” where — probably thanks to big pay-outs at the top end to exactly the same people who helped bring us the 2008 crisis — average real weekly earnings went up about £100 a week between 2014 and 2016.

We need to rebuild union strength from workplace level upwards.