http://www.theguardian.com/society/...trengthen-unions-confront-corporate-interests
How to eradicate poverty: spend more on wages and strengthen unions
Joanna Mack
The 1980s decision to embrace the market, union-busting and deregulation, together with disinvestment in public housing and rolling privatisation is one of history’s great political blunders.
‘Reversing poverty requires a more progressive tax system and a shift in the political mindset towards accepting that poverty is driven by an accumulated reduction in opportunities, in pay and in life chances.’ Photograph: Murdo MacLeod
The findings of our four Breadline Britain, and
Poverty and Social Exclusion, surveys since 1983 show that poverty in the UK is at a 30-year high. The rise is not explained by a sudden explosion of a culture of poverty, nor by out-of-control benefits. Rather, it is because of a surge in the numbers of working poor. It’s about the way that the politically driven shift in power from the workforce to corporations has shrunk the share of the cake going to the bottom half of the labour force, leaving growing numbers at the mercy of low-pay, zero-hours and insecure contracts.
This pain will continue, whoever forms the next government. Labour will cut less deeply, but both major parties plan further cuts in welfare and social spending. Yet the research is clear: what reduces poverty is the share of national income we devote to social spending. No advanced economy achieves a low poverty rate with low levels of social spending.
Reversing the poverty tide requires fundamental social and economic reform. Tinkering is not enough. It means a more progressive tax system and addressing personal and corporate tax avoidance. It requires a shift in the political mindset, away from pinning the blame on the poor themselves and towards accepting that poverty is driven by an accumulated reduction in opportunities, in pay and in life chances.
We need measures to boost the share of national income going to wages and to narrow the pay gap between top and bottom.
It also means a very different economic model. We need measures to boost the share of national income going to wages and to narrow the yawning pay gap between top and bottom. Achieving this requires much more than modest rises in the minimum wage and in the top rate of income tax. It will also mean confronting corporate interests and reversing the sustained decline in workforce bargaining power in the UK. International evidence shows that the higher the level of trade union membership, the lower the degree of inequality. Another vital measure must be a more concerted attempt to reduce the average gender pay gap by raising women’s wages. Currently the gap stands at 19%.
Such measures are critical to cutting workforce poverty levels. Yet few of them are on the political agenda. The 1980s decision to embrace the market, union-busting and deregulation, with the accompanying disinvestment in public housing and rolling privatisation is one of history’s great political blunders.
It has weakened the productive base of the economy, spread social recession and plunged millions, unnecessarily, into poverty. Despite its evident flaws, this model with its bias to capital and upflow of wealth is still very much intact. During the 1930s slump, Keynes warned of the continuing grip of old thinking, “practical men … are the slaves of some defunct economists”. This approach is only too relevant today.
Our Breadline Britain research has found a consistent and widespread agreement that citizens are entitled to a minimum standard of living that is relevant to today and sufficient to enable everyone to be full citizens. Yet British policy makers have increasingly failed to back this consensus.
One cannot be optimistic. In 2010, all the political parties signed up to the Child Poverty Act with its legal obligation to reduce poverty. That heady consensus has long been in ruins, and since then, the act’s targets effectively dumped. There are plenty of workable policies that could, with political will, cap and reverse the sustained rise in poverty, yet, in a fundamental failure of democracy, we are close to an election in which the weakest and most vulnerable part of the electorate is simply being sidelined. We must do better than this.
