Too many low-pay, low-skill and low-productivity jobs in low-investment workplaces are hampering the chances of a recovery we can all share in, writes the TUC general secretary
The statistics may tell us that growth has returned and that we are in the middle of a recovery, but it doesn’t feel like that. Across the workforce – except at the top – wages still lag behind the cost of living. Unemployment may be relatively low, but job quality is too.
After the crash everyone agreed that we needed to rebalance the economy. But it has not happened. So far, growth has more to do with consumer spending on the back of house-price inflation than investment, exports and wealth creation. Instead we seem to be rebalancing the workforce. The good jobs that went in the crash have been joined by the victims of austerity economics as public servants have got the boot or not been replaced, even while their pay is driven down. No wonder NHS staff have joined local government workers and teachers in industrial action ballots.
For sure, some decent jobs have been created, but far too few. Insecurity and low pay are the new normal. Many want full-time work but are stuck part-time. Others live hand to mouth on zero-hours contracts or agency work. Many work in jobs that fail to use their skills and talents. Others work very long hours to make ends meet. Self-employment has grown, some fulfilling but some bogus – and much poorly paid.
Some economists and business leaders talk of a productivity puzzle – they cannot work out why we are not producing more, given our high employment levels. But there is no great mystery. It is the obvious result of too many low-pay, low-skill and low-productivity jobs in low-investment workplaces. The same business leaders talk up what they call labour-market flexibility, but it drives a vicious circle of a low-commitment economy that fails to put decent wages into consumer wallets or a good tax take into government coffers.
To tackle this we need action for both short and longer term. To start, we need to use the power of government to boost incomes and reduce insecurity. The minimum wage should rise, the public sector pay cap should go, and the state should do more to spread the living wage through procurement. In sectors that can do better than the minimum wage, new institutions involving unions and employers should set not just minimum pay but boost productivity through skills and investment. We need new rules to tackle the employment abuses, whether using zero hours, bogus self-employment or other loopholes.
And in the longer term we need to genuinely rebalance the economy using industrial policy, skills, infrastructure and low carbon-investment, and regional policy. And, as the TUC will say at our congress, Britain needs a pay rise, not just to bring relief to hard-pressed workers but to drive a sustainable economic recovery.