the era of low wages may be over

For almost half a century, that is to say, within the bounds of political memory, Britain was a country where the priority of most governments was to keep some numbers down key economics. Income tax, interest rates, inflation and most people’s wages: all have been deliberately suppressed by Downing Street and its associates in business and the Bank of England. In doing so, space has been created – in theory at least – for certain interest groups to flourish: employers, entrepreneurs, shareholders, high wage earners, owners and consumers. Together, they were supposed to boost our previously sluggish rate of economic growth.

It didn’t quite work out that way. Britain is once again on the brink of recession. Interest rates, taxes and inflation are all high. Only average wages are still low. And even that dubious achievement of British government and capitalism since the 1980s now looks fragile, with strikes solidifying and spreading in the private and public sectors, determined by workers finally fed up with years of pay cuts. . As Mick Lynch of the RMT union put it with characteristic conciseness on the Today program last week: “Labour is not priced right in this country.

What would life be like in Britain if most people’s salaries were more generous? One answer is more like life in many other wealthy countries. According to the United Nations, the share of our gross domestic product that goes to employees is lower than that of France, Germany, Italy, Australia, South Korea, Canada, the United States United States and half a dozen other, often more prosperous, capitalist countries. This “labour share” has fallen in Britain for most years since the late 1970s, when the great counterattack began against unions and decent wages for the masses. The absence of this general but telling indicator from everyday debate in Britain shows how much our politics is shaped by essentially right-wing assumptions.

Related: UK labor market heading for turning point as wage growth nears peak

But now, the national conversation on compensation seems to be changing. Lynch says the strikes — which, despite months of disruption, still enjoy substantial public support — are ultimately about “rebalancing our society.” This is a very ambitious goal for a trade union movement much smaller than at its peak in the 1970s; who best receives qualified support from Labour; and facing a cornered Conservative government that sees a successful confrontation with the unions as one of the few ways to stay in power. Yet the cost of living crisis and crippling staff shortages from the NHS to the railways mean that the old Westminster and media orthodoxy that keeping pay low is the only realistic option for Great Britain Brittany is losing its strength.

If salaries were generally higher, it would almost certainly be easier to recruit and retain staff. Some of the large number of adults who chose to leave the national workforce in recent years would likely return. Workers could be more motivated and efficient, easing Britain’s productivity crisis. Some employees could work fewer hours, and families could benefit.

With higher disposable incomes, people would likely spend more, boosting the UK economy. Meanwhile, the state should spend less on benefits that effectively subsidize low wages. According to the Joseph Rowntree Foundation, two-thirds of poor working-age adults live in a household where someone works. Higher wages could make having a job a real – rather than often rhetorical – way out of poverty.

Realigning the economy to the needs of the majority would also have costs. Taxes or government borrowing should rise to fund better public sector wages – at least in the short term, until the bill for work-related benefits falls and rising incomes accelerate growth. Goods and services could also become more expensive. We’ve become accustomed to a world where almost anything can be delivered cheaply to our doorstep – and almost anything can be done to us at work. In a world of higher wages, we could lose some of our power as consumers, while gaining power as workers. At first, we might feel the loss of familiar pleasures more than we use this new agency.

But inflation has already begun to end the golden age of consumption for most of us anyway. And higher wages can also bring more welcome disruptions. The gap between ordinary earners and elites, which has widened even more in Britain than in most wealthy countries, could narrow, especially if taxes are raised to boost public sector wages. Such a shrinkage could have both psychological and material consequences. The extreme separation and sense of entitlement of the modern wealthy, and the sickening mixture of fascination and loathing that the wealthy evoke in us, evident in such hit TV shows as Succession and The White Lotus, might lessen a bit if the economic security was not so unfairly distributed.

Now, some or all of these potential changes may seem far-fetched. But an economy where most people’s wages rose rather than fell once existed in Britain. For most of the first three decades of the 20th century, and then from the late 1940s through the mid-1970s, the “labour share” rose. In fact, its trajectory over the past 150 years forms a wave pattern, with collapses regularly followed by recoveries. Another recovery is overdue.

It may be more difficult to achieve this this time. During previous wage hikes, the economy and union membership were often booming, unlike today. Today’s workers will have to be cunning and relentless to get more, when the rewards provided by capitalism globally may dwindle for some time.

But the survival, on the contrary, of the status quo of low wages seems increasingly uncertain. In 1962, one of the most influential modern economists wrote that “in a market society” the manner in which remuneration is distributed “is unlikely to be tolerated unless it is also seen to bring distributive justice”. . Without broad public acceptance of such economic arrangements, he continued, “no society can be stable.”

The economist was Milton Friedman, one of the gurus of the global right. With Britain in such a bad shape now that even he and Mick Lynch could agree on some things, if Friedman was still alive, the end of our era of low wages could come.

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