A think-tank report said that growth was not the answer to the country's economic problems: because of resource and environmental limits it was neither possible, necessary nor desirable. The alternative was to invest in non-fossil fuel energy resources, introduce controls on credit, gradually shorten the working week, reduce inequality, and limit the use of materials: national income would be lower, but welfare would be increased in the long term.
Source: Brian Heatley, Joined up Economics: The political economy of sustainability, financial crises, wages, equality and welfare, Green House
Links: Report
Date: 2012-Dec
An article said that the increased concentration of income over the previous three decades had led to more fragile and unstable economies, making it a key cause of the 2008 global economic crash and of the subsequent lack of recovery. Models of capitalism that failed to share the proceeds of growth more evenly would eventually self-destruct. More equal societies had softer business cycles. In contrast, more unequal economies were associated with more extreme cycles, with exaggerated booms, deeper falls, and extended troughs. The scale of inequality was not just an issue about fairness and proportionality: it was integral to economic health.
Source: Stewart Lansley, 'Inequality, the crash and the ongoing crisis', Political Quarterly, Volume 83 Issue 4
Links: Abstract
Date: 2012-Dec
An article examined the contribution of collective agreements to social policy in the European Union over the period 2008–2011 – through provisions for short-time work, training, wage moderation, and flexibilization of wage setting and working time. It contrasted the private sector's very limited scope for integrative bargaining in the face of mounting budget deficits and austerity with the public sector's (initially) more balanced trade-offs between cost competitiveness and maintenance of employment and wages, especially in countries with co-ordinated bargaining systems.
Source: Vera Glassner and Maarten Keune, 'The crisis and social policy: the role of collective agreements', International Labour Review, Volume 151 Issue 4
Links: Abstract
Date: 2012-Dec
The coalition government published the 2012 Autumn Statement on the economy and public finances. Independent forecasts of economic growth were revised down significantly for every year between 2012 and 2016, and the government conceded that it would fail to reach its targets for reducing public borrowing: as a result there would have to be a continuation of 'austerity measures' until at least 2017-18, three years longer than originally planned. The statement contained a series of measures that were neutral overall in budget terms. The measures included:
• An increase of just 1 per cent in cash terms in most working-age benefits and tax credits in each of the three years 2013-14 to 2015-16, saving £4.5 billion annually by 2017-18. Disability benefits and pensions would be unaffected. Child benefit would be frozen in 2013-14 (as previously planned).
• Further cuts to departmental resource budgets of 1 per cent in 2013-14 and 2 per cent in 2014-15 (except for health and schools, and excluding local government in 2013-14).
• A further increase in the annual personal income tax allowance for 2013-14, from £9,205 to £9,440, at an annual cost of around £1 billion. A rise of 1 per cent in cash terms in the higher rate threshold for income tax in 2014-15 and 2015-16.
• Cuts in the lifetime and annual tax allowances for pension contributions, raising £1.1 billion by 2017-18 from the wealthiest 1-2 per cent of savers.
• A cut of 1 percentage point in corporation tax from 2014-15, costing £8-900 million each year by 2015-16.
• Cancellation of the increase in fuel duty planned for January 2013.
An official distributional analysis of the effects of changes to tax, tax credits, and benefits up to 2013-14 showed those in the lowest half of the income distribution would suffer a loss of net income, with those in the lowest decile losing most. Those in the seventh and eighth deciles would gain slightly: but those in the topmost decile would lose most of all (around 2 per cent).
Source: Autumn Statement 2012, Cm 8480, HM Treasury, TSO
Links: Autumn Statement | Distributional Analysis | Hansard | HOC research brief | Barnardos press release | CBI press release | Centrepoint press release | Childrens Society press release | CIH press release | CIPFA press release | Citizens Advice press release | CPAG press release | Disability Rights UK press release | Fawcett Society press release | 4Children press release | Gingerbread press release | Hardest Hit press release | IEA blog post | JRF press release | Labour Party press release (1) | Labour Party press release (2) | LGA press release | LIRTG press release | Maternity Action press release | Mencap press release | NCB press release | NEF blog post | NHF press release | NHS Confederation press release | NPC press release | Resolution Foundation press release | Rethink press release | Scope press release | Shelter press release | SMF press release | TUC press release | WBG press release | Working Families press release | BBC report (1) | BBC report (2) | BBC report (3) | Community Care report | Daily Mail report | Guardian report (1) | Guardian report (2) | Guardian report (3) | Guardian report (4) | Guardian report (5) | Guardian report (6) | Guardian report (7) | Inside Housing report | Nursery World report | Public Finance report
Date: 2012-Dec
A trade union report examined why the share of national income going to wages had fallen over the previous 30 years from 59 to 53 per cent, whereas the proportion going to profits had increased from 25 to 29 per cent. The main reason had been the decline of industries that spent a high proportion of turnover on wages, such as manufacturing, and the expansion of new industries that had a far higher profit margin, such as financial services. The entirety of the rising profit share since 1980 had gone to just to one industry – financial services.
Source: Howard Reed and Jacob Mohun Himmelweit, Where Have All the Wages Gone? Lost pay and profits outside financial services, Trades Union Congress
Links: Report | TUC press release
Date: 2012-Dec
A think-tank report said that the outlook for public finances had worsened since the Office for Budget Responsibility s March 2012 forecasts. Economic growth had been weaker than forecast, and the growth in tax revenues had been lower (by more than would normally be explained purely by weak economic growth). Hitting fiscal targets would require the government to (for example) extend to 2017-18 the same average squeeze on public service spending that was planned for the Spending Review 2010 period, make £8 billion of benefit spending cuts, and implement a further £11 billion of tax increases or public spending cuts.
Source: Carl Emmerson and Gemma Tetlow, Autumn Statement 2012: More Fiscal Pain to Come?, Briefing Note 136, Institute for Fiscal Studies
Links: Briefing Note | IFS press release | Labour Party press release | TUC press release | BBC report | Daily Mail report | Public Finance report | Telegraph report
Date: 2012-Nov
A paper examined the relationship between business cycles and inequality in developed (OECD) countries. At the business cycle frequencies, income inequality was counter-cyclical, whereas consumption inequality was pro-cyclical. There was a stronger correlation of the business cycle with inequality in hours of work than in hourly wages. There was 'considerable evidence' of a two-way causal relationship between macroeconomic variables and inequality at the business cycle frequencies.
Source: Virginia Maestri and Andrea Roventini, Stylized Facts on Business Cycles and Inequality, Discussion Paper 30, GINI Project (European Commission)
Links: Paper
Date: 2012-Nov
A paper examined the economic effects of introducing two elements of a fiscal union in Europe: firstly, an EU-wide tax and transfer system; and secondly, an EU-wide system of fiscal equalization. Replacing one-third of the national tax and transfer systems by a European system would lead to significant redistributive effects both within and across countries.
Source: Olivier Bargain, Mathias Dolls, Clemens Fuest, Dirk Neumann, Andreas Peichl, Nico Pestel, and Sebastian Siegloch, Fiscal Union in Europe? Redistributive and stabilising effects of a European tax-benefit system and fiscal equalisation mechanism, Working Paper 12/22, Oxford University Centre for Business Taxation (Said Business School, Oxford)
Links: Paper
Date: 2012-Oct
A think-tank report examined ways of reducing regulatory 'burdens' on small and medium-sized companies. Proposals included: abolishing employers national insurance contributions; making it easier for employers to fire employees for misconduct; and abolishing the minimum wage for young workers.
Source: Vuk Vukovic, Unburdening Enterprise: Reducing regulation for small and medium businesses, Adam Smith Institute
Links: Report
Date: 2012-Oct
A think-tank report examined some of the main policy challenges that would confront a future Labour government. Separate chapters dealt with economic policy, employment policy, public services, and social care funding.
Source: Graeme Cooke, Patrick Diamond, and Steve Van Riel, Purple Papers: Real Change for Britain, Real Choices for Labour, Progress
Links: Report
Date: 2012-Oct
A government-commissioned report set out a comprehensive economic plan designed to improve the country s ability to create wealth. It made the case for a major rebalancing of responsibilities for economic development between central and local government, and between government and the private sector.
Source: Michael Heseltine, No Stone Unturned in Pursuit of Growth, Department for Business, Innovation and Skills
Links: Report | Review press release | Heseltine speech | DBIS press release | BCC press release | CBI press release | Core Cities press release | Institute for Government press release | IOD press release | Labour Party press release | LGA press release | Localis press release | NPI blog post | REC press release | TCPA press release | TUC press release | BBC report | Guardian report | Inside Housing report | Public Finance report | Telegraph report (1) | Telegraph report (2)
Date: 2012-Oct
A new book examined how developed (OECD) countries were responding to the global financial crisis. It highlighted the failures of public policy in the half-decade before the crisis, and revealed the 'fundamental failings' of globalization and the lack of a robust and resilient public sector paradigm to assist countries in economic recovery. It proposed a new model of public policy in place of the paradigm of market liberalism, and placed full employment, sustainability, and equality at the top of the post-crisis policy agenda. One of the main features of public policy in the next ten years would be a reduction in inequality – in particular, a reduction in the wealth and income held by the 'super' rich.
Source: Philip Haynes, Public Policy beyond the Financial Crisis: An international comparative study, Routledge
Links: Summary
Date: 2012-Oct
A paper examined the impact of the global economic crisis on household incomes in developed (OECD) countries. For most countries, there was little change in household income distributions in the two years following the downturn (in 2007): but in the subsequent 5-10 years much greater change was likely, as a result of governments' fiscal consolidation and the slow pace of economic recovery. The social safety nets developed since the Great Depression therefore played an important cushioning role in the short term.
Source: John Micklewright, The Impact of the Great Recession on the Incomes of Households, Working Paper 12-07, Department of Quantitative Social Science, Institute of Education (University of London)
Links: Paper
Date: 2012-Oct
A commission report said that millions of households were heading for a long period of stagnant living standards unless bold steps were taken to ensure that growth over the next decade was broadly shared. Even with a return to steady growth, it was possible that living standards for a large number of low- and middle-income households would be no higher by 2020 than they were in 2000. The report set out a comprehensive series of recommendations spanning low pay, improving employment levels, and reform of the tax and benefit system. Future improvements in living standards would have to come from higher employment and pay rather than rising state support.
Source: Gaining from Growth, Commission on Living Standards/Resolution Foundation
Links: Report | Resolution press release | NPI blog post | Scope press release | Guardian report (1) | Guardian report (2) | Inside Housing report | Nursery World report | Public Finance report | Telegraph report
Date: 2012-Oct
A report said that the onset of the global recession in 2008 had reduced economic well-being as a result of a general fall in real national and household incomes. Initially household income had held up better than in the recession at the start of the 1990s. This was partially a result of unemployment not rising to the same extent, and historic low interest rates reducing mortgages payments. In contrast to the recovery from the 1990s recession, however, real household incomes had begun to fall as the economy emerged from the contraction that started in 2008 – a downward trend that had continued to the start of 2012. The cause of this fall was primarily an increase in prices for fuel, utility bills, and food. National well-being was more than 13 per cent down on its level before the global financial crisis.
Source: Gerard Carolan, Valerie Fender, Sue Punt, and Damian Whittard, Measuring National Well-being – The Economy, Office for National Statistics
Links: Report | ONS press release | TUC press release | Guardian report
Date: 2012-Oct
A think-tank report documented the nature of real wage changes across the wage distribution over the previous three decades, showing that the recent period of stagnant real wage growth represented a distinct break of trend that pre-dated the onset of recession. An increased sensitivity of real wages to unemployment appeared to have been an important factor in this slowdown of real wage growth.
Source: Paul Gregg and Stephen Machin, What a Drag: The chilling impact of unemployment on real wages, Resolution Foundation
Links: Report | Resolution press release
Date: 2012-Sep
A new book examined the economic recession in Europe over the period 2008–2012, its economic and social causes, its historical roots, and the policies adopted by the European Union to find a way out of it.
Source: Ivan Berend, Europe in Crisis: Bolt from the blue?, Routledge
Links: Summary
Date: 2012-Sep
The coalition government announced a 'red tape blitz'. Under the plan:
• Hundreds of thousands of businesses would be exempted from health and safety inspections. From April 2013, businesses would only face inspections if they were operating in higher-risk areas such as construction, or if they had a track record of poor performance.
• New legislation would protect business from 'compensation culture' claims. Businesses would only be held liable for civil damages in health and safety cases if they could be shown to have acted negligently.
• Over 3,000 other regulations affecting businesses would be scrapped or overhauled.
Source: Press release 10 September 2012, Department for Business, Innovation and Skills
Links: DBIS press release | Conservative Party press release | BCC press release | CBI press release | CIEH press release | TUC press release
Date: 2012-Sep
A new book (by a group of Conservative MPs) said that the United Kingdom needed to copy a range of practices in other countries in order to revive its economic fortunes. Britons were among 'the worst idlers' in the world, preferring a 'lie-in to hard work'. The United Kingdom workforce should model itself on the workers of South Korea, Singapore, and Hong Kong, rather than those in European nations.
Source: Kwasi Kwarteng MP, Priti Patel MP, Dominic Raab MP, Chris Skidmore MP, and Elizabeth Truss MP, Britannia Unchained: Global lessons for growth and prosperity, Palgrave Macmillan
Links: Summary | New Statesman report
Date: 2012-Sep
A new book presented a radical new conception of public ownership, framed around economic democracy and public participation in economic decision-making. A reconstituted public ownership was central to the creation of a more just and sustainable society.
Source: Andrew Cumbers, Reclaiming Public Ownership: Making space for economic democracy, Zed Books
Links: Summary
Date: 2012-Sep
A study found that a rise in the profit share of national income in advanced economies was linked to a rise in inequality of incomes and in poverty. Policies targeting liberalization, deregulation, and in general the slow erosion of the welfare state, were the major factors explaining the observed trends.
Source: Olivier Giovannoni, Functional Distribution of Income, Inequality and the Incidence of Poverty: Stylized facts and the role of macroeconomic policy, United Nations Research Institute for Social Development
Links: Report
Date: 2012-Sep
A think-tank study examined the changing structure of the jobs market in tandem with the effects of the tax and benefit system, and modelled the prospects for households in the recovery from economic recession. It said that living standards for low- and middle-income households would be lower in 2020 than they had been a decade earlier even if growth returned: households in this group were set for income falls of between 3 and 15 per cent over the period 2008–2020.
Source: Institute for Employment Research/Institute for Fiscal Studies, Who Gains from Growth? Living standards in 2020, Resolution Foundation
Links: Report | Resolution press release | Guardian report (1) | Guardian report (2) | Observer editorial
Date: 2012-Sep
An article examined whether the labour share (wage-productivity gap) was a major factor in the evolution of inequality and employment, using data for the United States of America, United Kingdom, and Sweden. During the 1990s the cost of a 1 per cent increase in employment was a 0.7-0.9 per cent increase in inequality in all three countries. However, in the 2000s, whereas the inequality-employment sensitivity ratio fell slightly in the United States of America, it exceeded unity in the other countries. In the UK a 1 per cent growth in employment was achieved at the expense of 1.3 per cent worsening in income inequality. The inequality-employment sensitivity ratio could be viewed as a barometer of socio-economic pressure.
Source: Marika Karanassou and Hector Sala, 'Inequality and employment sensitivities to the falling labour share', Economic and Social Review, Volume 43 Number 3
Links: Article
Date: 2012-Sep
A paper examined how social dialogue in Europe had addressed the impact of the global economic crisis. Although social dialogue had proved to be key in overcoming the crisis and maintaining stability in Europe's industrial relations systems, it had also been weakened by the impact of the crisis. The crisis had exacerbated pre-existing 'weak spots' at the various levels of social dialogue, and had led to an increase in unilateral decision making by governments within the public sector.
Source: Stavroula Demetriades and Christian Welz, Role of Social Partners in Addressing the Global Economic Crisis, European Foundation for the Improvement of Living and Working Conditions
Links: Paper
Date: 2012-Sep
A survey examined the impact that the economic recession had had on the nation's health, and how this might have impacted on family doctors' practices. 76 per cent of family doctors said that the recession had had a detrimental effect on the health of their patients.
Source: The Austerity Britain Report: The impact of the recession on the UK s health, according to GPs, Insight Research Group
Links: Report
Date: 2012-Aug
An article examined what the phenomenon of the 'squeezed middle' meant for the design and prosecution of progressive economic policy. Any progressive government needed to adopt a new first-order goal of economic policy: ensuring that the material well-being of ordinary working people rose when the economy grew. This objective would sit in addition to the traditional goals of sustained national income growth, high employment, low inflation, and poverty reduction. It would have real implications across a range of important policy areas.
Source: James Plunkett, 'The rising tide economy: lessons from the squeezed middle for progressive economic policy', Political Quarterly, Volume 83 Issue 3
Links: Abstract
Date: 2012-Aug
An article examined whether those English regions that had been worst affected by the economic recession of 2008–2010 had had the greatest increases in suicides. It provided evidence that the English regions with the largest rises in unemployment had had the largest increases in suicides, particularly among men.
Source: Ben Barr, David Taylor-Robinson, Alex Scott-Samuel, Martin McKee, and David Stuckler, 'Suicides associated with the 2008–10 economic recession in England: time trend analysis', British Medical Journal, 14 August 2012
Links: Article | Liverpool University press release | Guardian report
Date: 2012-Aug
An article said that the coalition government's cut-backs and restructuring of the welfare state implied considerable risks for citizens and for the economy. Any viable alternative programme needed to be eclectic, and to accept that some parts of a good welfare state could not be justified on practical economic or human capital grounds: they needed to be included because they were good in themselves.
Source: Peter Taylor-Gooby, 'Overview: resisting welfare state restructuring in the UK', Journal of Poverty and Social Justice, Volume 20 Number 2
Links: Abstract
Date: 2012-Aug
The Bank of England said that the richest 10 per cent of households had seen the value of their assets increase substantially as a result of its policy of 'quantitative easing' designed to underpin liquidity in financial markets.
Source: The Distributional Effects of Asset Purchases, Bank of England
Links: Paper | Bank of England press release | BBC report | Guardian report | Telegraph report
Date: 2012-Aug
A report examined the future of economic policy in Europe. It said that austerity measures were not the right answer to the crisis. A proper recovery plan would need a new macroeconomic framework – through wage, fiscal, and public policies – in conjunction with much stronger financial regulation. A 'wage standard' should be considered, involving measures to reduce the divergence in unit costs of labour between different countries: this would meet the need for social redistribution and also help to tackle trade imbalances.
Source: Ernst Stetter et al., Austerity Is Not the Solution! Contributions to European economy policy, Foundation for European Progressive Studies
Links: Report
Date: 2012-Aug
HM Treasury published its annual report for 2011–12.
Source: Annual Report and Accounts 2011–12, HC 46, HM Treasury, TSO
Links: Report
Date: 2012-Jul
The Finance Bill was given a third reading and received Royal assent. The Act was designed to implement measures contained in the 2012 Budget statement.
Source: Finance Act 2012, HM Treasury, TSO | Debate 3 July 2012, columns 769-888 , House of Commons Hansard, TSO
Links: Act | Explanatory notes | Hansard
Date: 2012-Jul
A report examined the relationship between trends in earnings and working conditions in Europe. The global crisis of 2008–2010 had affected pay in most European Union member states, leading to wage moderation, pay freezes, and sometimes pay cuts. The crisis had hit vulnerable groups (low-skilled, young, migrants) particularly hard. But the crisis had affected employment even more than wages. Cuts in low-paid and temporary jobs, or reductions in work hours, tended to be the first measure adopted, whereas cutting wages was seen as detrimental to worker motivation and retention.
Source: Sem Vandekerckhove, Jan Van Peteghem, and Guy Van Gyes, Wages and Working Conditions in the Crisis, European Foundation for the Improvement of Living and Working Conditions
Date: 2012-Jul
An article said that austerity in Wales had to be understood in the context of the more general budgetary limitations created by the out-dated Barnett formula and the debates in Wales (and Scotland) about the ways in which devolved functions should be funded in the future. It identified the key measures that successive administrations had adopted in support of an essentially Keynesian, counter-cyclical approach to countering recession in Wales.
Source: Mark Drakeford, 'Wales in the age of austerity', Critical Social Policy, Volume 32 Issue 3
Links: Abstract
Date: 2012-Jul
A paper examined whether the global financial and economic crisis had brought about changes in the quality of life of citizens of the European Union. On the whole, the crisis had led to a decline in quality of life. This was more apparent for those living in countries most affected by the crisis. Vulnerable groups such as those who were unemployed, elderly or retired, as well as people suffering financial difficulties, had experienced a considerable drop in their well-being.
Source: Branislav Mikulic, Eszter Sandor, and Tadas Leoncikas, Experiencing the Economic Crisis in the EU: Changes in living standards, deprivation and trust, European Foundation for the Improvement of Living and Working Conditions
Links: Paper
Date: 2012-Jun
A report examined ways of promoting inclusive economic growth in Europe. The second part focused on the relationship between social policies and economic growth, including chapters on income inequality, family services, health systems, and job flexibility.
Source: Claudio De Vincenti (ed.), Fair, Robust and Sustainable: A recipe for Europe s growth, Foundation for European Progressive Studies
Links: Report
Notes: Chapter details: Vito Peragine, 'Income and inequality: a contribution to a European strategy from the equality of opportunity perspective' | Jeanne Fagnani, 'The development of family services: a precondition for promoting economic growth and social development in Europe' | Naomi Chambers, 'Health systems: challenges and growth strategies' | Andranik Tangian, 'Flexicurity: promises and outcomes' | Elsa Fornero, 'The "good" flexibility in individuals life cycle: an achievable goal or a chimera?'
Date: 2012-Jun
A paper said that the challenges of an era of austerity required serious thinking around the size and role of the state, the level and composition of public spending, and the most efficient and effective way of reforming the tax system.
Source: Paul Johnson, Time for a Plan C? Slow Growth and Fiscal Choices, Royal Society for the Encouragement of Arts, Manufactures & Commerce
Links: Paper | Guardian report
Date: 2012-Jun
Date: 2012-Jun
A paper examined the link between economic growth and rising prosperity, in relation to issues such as fair pay, housing, childcare, part-time work, and immigration. A radical policy rethink might be needed in order to navigate a way through a stagnant post-crisis decade while minimizing the social impact. Existing policy was geared toward protecting at all costs affluent 'baby boomers' from the pain of fiscal adjustment – leaving the young and families to take the strain. Action was needed to ensure a fairer adjustment to the effects of the crisis.
Source: Gavin Kelly, Time for a Plan C? Slow Growth and Living Standards, Royal Society for the Encouragement of Arts, Manufactures & Commerce
Links: Paper | Guardian report
Date: 2012-Jun
A survey report examined the continuing consequences of austerity for members of a large public services union:
• 73 per cent) had not received any pay increase in the latest pay round.
• 25 per cent had experienced an effective redundancy situation at work in the previous year – through redundancy, redeployment, or having to apply for their own jobs.
• 28 per cent were working longer hours than provided for in their contracts.
• 47 per cent said that their household income had decreased. 1 in 4 described their financial situation as being in 'difficulty', or said that they were 'struggling to survive'.
• 77 per cent expressed worries about their finances, particularly due to potential redundancies.
• 22 per cent reported personal debts of £10,000 or more. 27 per cent had increased their credit card borrowing, and 1 in 10 had been forced to borrow money from friends or family.
• 73 per cent had reduced spending on food shopping, and 20 per cent had reduced spending on items for their children.
• In those households in receipt of benefits, nearly 1 in 5 had lost their tax credit. Nearly 1 in 5 had lost out as a result of the abolition of the educational maintenance allowance.
Source: Leena Kumarappan, Sonia McKay, and Sian Moore, The Impact of Austerity on UNISON Members 2012, Unison
Links: Report
Notes: UNISON represents more than 1.3 million members working in the public services and for contractors providing public services.
Date: 2012-Jun
A think-tank pamphlet said that sustainable recovery from the financial crisis would require the restoration of the wage share to post-war levels, and the breaking-up of concentrations of income and wealth. Historical evidence suggested a strong link between inequality and economic instability.
Source: Stewart Lansley, Rising Inequality and Financial Crises: Why greater equality is essential for recovery, Centre for Labour and Social Studies
Links: Pamphlet
Date: 2012-May
An article developed a new account of liberal justice – 'free market fairness' – in order to show how limited government and the material betterment of people in poverty could be reconciled. It called on the political left to rethink its attitude towards private economic liberty.
Source: John Tomasi, 'Social justice, free market style', Public Policy Research, Volume 19 Issue 1
Links: Abstract
Date: 2012-May
A new book examined the psychology behind the 'fetishization' of profit in modern society. It highlighted the threat that neo-liberalism posed to public services, and put forward the case for a return to a more socialistic consciousness.
Source: Stuart Sim, Addicted to Profit: Reclaiming our lives from the free market, Edinburgh University Press
Links: Summary
Date: 2012-May
A report said that economic policy should be better designed to bring about more inclusive growth, ensuring that the benefits of increased prosperity were shared more evenly across society.
Source: Luiz de Mello and Mark Dutz (eds.), Promoting Inclusive Growth: Challenges and policies, Organisation for Economic Co-operation and Development/World Bank
Links: Report | OECD press release
Date: 2012-May
A committee of the Council of Europe's Parliamentary Assembly said that the restrictive economic policies being pursued in Europe might fail in their objective of consolidating budgets, and risked further deepening the crisis – as well as undermining social rights and harming the most vulnerable groups. It called for a 'profound re-orientation' of austerity programmes, ending their quasi-exclusive focus on cutting social programmes. The European social model and its various national expressions should be protected, and the welfare state should be further strengthened.
Source: Andrej Hunko, Austerity Measures – A Danger for Democracy and Social Rights, Council of Europe
Links: Report | Council of Europe press release
Date: 2012-May
A new book said that the causes and policy implications of the global economic crisis could not be properly assessed by focusing on allocative efficiency or income growth alone: a more general approach was needed, based on social costs.
Source: Wolfram Elsner, Pietro Frigato, and Paolo Ramazzotti (eds.), Social Costs Today: Institutional analyses of the present crises, Routledge
Links: Summary
Date: 2012-May
An article said that the global economic crisis of 2007-08 had been sparked primarily by mismanagement of capital markets through speculation and excessive risk-taking by very highly paid men (predominantly) in the financial centres of the western world: but the underlying causes were deeply rooted in the neo-liberal model of global development itself. Neo-liberalism was associated with unsustainable increases in earnings inequalities, and a related imbalance between productivity and wages, resulting in a fall in the share of output accruing to labour. These inequalities formed a key element in generating the crisis.
Source: Diane Perrons, '"Global" financial crisis, earnings inequalities and gender: towards a more sustainable model of development', Comparative Sociology, Volume 11 Number 2
Links: Abstract
Date: 2012-Apr
A paper said that the global economic crisis had been caused by the interaction of financial deregulation with rising inequality. Rising inequality created a downward pressure on aggregate demand, since it was poorer income groups that had high marginal propensities to consume. It had led to higher household debt, as working-class families had tried to keep up with social consumption norms despite stagnating or falling real wages. It had also increased the propensity to speculate, because richer households tended to hold riskier financial assets than other groups – the rise of hedge funds, and of subprime derivatives in particular, had been linked to the rise of the 'super rich'.
Source: Engelbert Stockhammer, Rising Inequality as a Root Cause of the Present Crisis, Working Paper 282, Political Economy Research Institute (University of Massachusetts, USA)
Links: Paper
Date: 2012-Apr
A think-tank paper said that the causal links between economic growth and income, and between income and well-being and opportunity, had broken down. As a result, policy should focus on the well-being and choice of existing and future generations. Rather than being directed at maximizing national income, policy should seek the highest level of well-being and choice for the existing population that was compatible with offering at least the same level of well-being and choice to future generations.
Source: Amna Silim, Wellbeing, Choice and Sustainability: What should economic policy target in a new era economy?, Institute for Public Policy Research
Links: Paper
Date: 2012-Apr
A report examined ways in which businesses in Europe could contribute to tackling the challenges posed by demographic change, focusing on enhancing the labour market participation of young people, older workers, and women.
Source: Jointly Tackling Demographic Change in Europe: Using the potential of female, older and future employees, CSR Europe
Links: Report
Date: 2012-Apr
The European Commission proposed a package of measures aimed at boosting employment growth. It urged member states to strengthen their national employment policies. In particular it urged support for hiring subsidies that created new jobs, a (budget-neutral) tax shift from labour to environmental taxes, and support for self-employment. It also called for measures to exploit the potential for employment growth in the 'green' economy.
Source: Towards a Job-Rich Recovery, European Commission
Links: Communication | European Commission press release | EC guide | ETUC press release
Date: 2012-Apr
An eight-part study examined whether it was possible in developed economies to combine policies to reduce income inequality with those designed to promote economic growth. It suggested that there were 'win-win' policy options: raising human capital was key, various labour market reforms could help, and taxation could be made more equitable and growth-friendly. But there were also reforms that led to a trade-off between growth and equity.
Source:
• Peter Hoeller, Isabelle Joumard, Mauro Pisu, and Debbie Bloch, Less Income Inequality and More Growth – Are They Compatible? Part 1: Mapping Income Inequality Across the OECD, Working Paper 924, Organisation for Economic Co-operation and Development
• Isabell Koske, Jean-Marc Fournier, and Isabelle Wanner, Less Income Inequality and More Growth – Are They Compatible? Part 2: The Distribution of Labour Income, Working Paper 925, Organisation for Economic Co-operation and Development
• Isabelle Joumard, Mauro Pisu, and Debbie Bloch, Less Income Inequality and More Growth – Are They Compatible? Part 3: Income Redistribution via Taxes and Transfers Across OECD Countries, Working Paper 926, Organisation for Economic Co-operation and Development
• Peter Hoeller, Less Income Inequality and More Growth – Are they Compatible? Part 4: Top Incomes, Working Paper 927, Organisation for Economic Co-operation and Development
• Mauro Pisu, Less Income Inequality and More Growth – Are they Compatible? Part 5: Poverty in OECD Countries, Working Paper 928, Organisation for Economic Co-operation and Development
• Kaja Bonesmo Fredriksen, Less Income Inequality and More Growth – Are they Compatible? Part 6: The Distribution of Wealth, Working Paper 929, Organisation for Economic Co-operation and Development
• Jean-Marc Fournier and Isabell Koske, Less Income Inequality and More Growth – Are they Compatible? Part 7: The Drivers of Labour Earnings Inequality – An analysis based on conditional and unconditional quantile regressions, Working Paper 930, Organisation for Economic Co-operation and Development
• Rafal Kierzenkowski and Isabell Koske, Less Income Inequality and More Growth – Are they Compatible? Part 8: The Drivers of Labour Income Inequality – A review of the recent literature , Working Paper 931, Organisation for Economic Co-operation and Development
Links: Paper (924) | Paper (925) | Paper (926) | Paper (927) | Paper (928) | Paper (929) | Paper (930) | Paper (931)
See also:
• 'Reducing income inequality while boosting economic growth: can it be done?' in Economic Policy Reforms: Going for Growth 2012, Organisation for Economic Co-operation and Development
• Inequality in Labour Income – What Are Its Drivers and How Can It Be Reduced?, Policy Note 8, Organisation for Economic Co-operation and Development
• Income Inequality and Growth: The Role of Taxes and Transfers, Policy Note 9, Organisation for Economic Co-operation and Development
Date: 2012-Apr
A report introduced a new quarterly statistical release on the household sector, aimed at providing a household perspective on economic activity. It said that the financial crisis and subsequent recession had had a significant impact on households. Although household incomes had initially remained fairly buoyant, and growth appeared to have recovered somewhat, the economic conditions facing households remained tough. Expenditure during the recession had reacted as expected, with consumers cutting back on non-essential items. The recession had had a distinct impact on the balance sheets of household through falls in asset prices, low interest rates, and households' desire to repay debts.
Source: Valerie Fender, Introducing the New Quarterly Household Release, Office for National Statistics
Links: Report | First release (Q4 2011) | R3 press release
Date: 2012-Apr
The Finance (No. 4) Bill was given a second reading. The Bill was designed to implement measures contained in the 2012 Budget statement.
Source: Finance (No. 4) Bill, HM Treasury, TSO | Debate 16 April 2012, columns 27-136, House of Commons Hansard, TSO
Links: Bill | Explanatory notes | Hansard
Date: 2012-Apr
The Scottish Government published a report setting out the actions being undertaken in Scotland in support of the delivery of the Europe 2020 strategy for inclusive growth. It identified priorities for delivering sustainable economic growth, driving recovery, boosting employment, and tackling inequality. On tackling poverty and income inequality, the framework for action aimed to: tackle income inequality by 'making work pay', maximizing the potential for people to work and maximizing income for all; take long-term measures to tackle poverty and inequality; and support those experiencing poverty.
Source: Europe 2020: Scottish National Reform Programme 2012, Scottish Government
Links: Report
Date: 2012-Apr
The coalition government published an annual report on measures taken in accordance with the European Union 2020 strategy for inclusive economic growth. It said that it was committed to making wide-ranging social reforms, including transforming children's life chances, reforming welfare systems, improving education, increasing social mobility, and tackling child poverty. The government aimed to achieve this objective by:
Taking actions that would focus on prevention and early intervention.
Concentrating interventions on recovery and independence, not maintenance.
Promoting work for those who could as the most sustainable route out of poverty, while offering unconditional support to those who were severely disabled and could not work.
Recognizing that the most effective solutions would often be designed and delivered at a local level.
Ensuring that interventions provided a fair deal for the taxpayer.
Source: Europe 2020: UK National Reform Programme 2012, HM Treasury
Date: 2012-Apr
An article employed a human rights perspective to examine the deficit reduction strategy of the coalition government, as set out in 2010 in the June Budget and October 2010 Spending Review. It considered the implications of the policy changes for child poverty and gender equality: in both cases there was evidence to suggest non-compliance with the government's human rights obligations.
Source: Diane Elson, 'The reduction of the UK budget deficit: a human rights perspective', International Review of Applied Economics, Volume 26 Issue 2
Links: Abstract
Date: 2012-Apr
A paper examined the effects of labour market institutions on unemployment in 19 developed (OECD) countries for the period 1960-2000, allowing for heterogeneous effects of institutions on unemployment. It was found that, on average, unemployment was increased in the presence of tighter employment protection, a higher tax burden on labour income, and a more generous unemployment insurance system – whereas a higher centralization of wage negotiations decreased unemployment. The strength of the effects differed considerably between countries.
Source: Horst Rottmann and Gebhard Flaig, Labour Market Institutions and Unemployment: An international comparison, Discussion Paper 31, University of Applied Sciences Amberg-Weiden (Germany)
Links: Paper
Date: 2012-Apr
A report by a committee of MPs analyzed the 2012 Budget measures. It said that:
• The cost and benefits of reducing the highest income tax rate from 50p to 45p were both highly uncertain, and could be significantly more or less than the cost included in the Budget statement: the government should publish in due course a comprehensive assessment of the exchequer effect of the new 45p rate.
• The government's latest proposals for 'reform' of child benefit solved only one of the two main problems identified with its original policy, and added further complexity.
• The government should publish an assessment of the impact of capping income tax reliefs on donations to charities: a more detailed explanation of the problem the cap sought to address was needed, along with consideration of other possible means of dealing with it.
• The government should consider whether there are any measures that should be taken to mitigate the redistributional effects of quantitative easing, in particular the losses incurred by people taking out pension annuities in a climate of very low interest rates.
Source: Budget 2012, Thirtieth Report (Session 2010-12), HC 1910, House of Commons Treasury Select Committee, TSO
Links: Report | Guardian report
Date: 2012-Apr
A new book examined the relationship between economic and social developments in Europe, focusing on the pressures caused by intensifying international competition, globalization, and financialization. Areas considered included: state and public policy at European, national, and regional level; the welfare state; industrial relations systems; education systems; and the family.
Source: Luigi Burroni, Maarten Keune, and Guglielmo Meardi (eds.), Economy and Society in Europe: A relationship in crisis, Edward Elgar Publishing
Links: Summary
Date: 2012-Mar
A paper examined the impact of structural economic reforms in developed (OECD) countries over time, including labour market and tax reforms. The benefits from reforms typically took time to fully materialize. When significant effects were found in the short run, reforms seldom involved significant aggregate economic losses; on the contrary they often delivered some benefits. The absence of major depressing effects did not lend support to the view that reforms should be in general accompanied by substantial macroeconomic policy easing in order to deliver some short-term gains. Nevertheless, there was also tentative evidence that some labour market reforms (for example, of unemployment benefit systems and job protection) paid off more quickly in good times than in bad times, and could even entail short-term losses in severely depressed economies.
Source: Romain Bouis, Orsetta Causa, Lilas Demmou, Romain Duval, and Aleksandra Zdzienicka, The Short-Term Effects of Structural Reforms: An empirical analysis, Economics Department Working Paper 949, Organisation for Economic Co-operation and Development
Links: Paper
Date: 2012-Mar
The 2012 Budget statement set out proposals to:
• Increase the income tax personal allowance by £1,100 in April 2013, to £9,205 per year. The basic rate limit (the range of income subject to income tax at the basic rate of 20 per cent) would be cut by £2,215 to £32,245 per year from the same date.
• Freeze the age-related personal tax allowance for those aged 65 and over from April 2013 at 2012-13 levels until it was aligned with the allowance for those aged under 65. From April 2013, the age-related allowance would be restricted to those eligible at that point.
• Cut the 50 per cent top rate of income tax to 45 per cent from April 2013.
• Cut corporation tax by an extra 1 per cent from April 2012, to 24 per cent. Together with cuts already announced, corporation tax would fall to 22 per cent in April 2014.
• Withdraw child benefit from households in which someone had an annual income of over £50,000 per year (rather than households with a higher-rate taxpayer as previously announced). The withdrawal of child benefit would be implemented in steps for households in which someone had an income of between £50,000 and £60,000.
• Introduce a new stamp duty rate of 7 per cent on residential property worth over £2 million.
• Issue to all taxpayers, from 2014-15, a new 'Personal Tax Statement' detailing the income tax and national insurance contributions that they had paid, their average tax rates, and how this contributed to public spending on different areas.
• Cut total public spending on 'welfare' by an additional £10 billion by 2016.
Source: Budget 2012, HC 1853, HM Treasury, TSO
Links: Report | Finance Bill | Hansard | HMT press release | Policy costings | Exchequer effect of 50 per cent tax rate | OBR press release | HOC research brief (1) | HOC research brief (2) | Age UK press release | Barnardos press release | CBI press release | Childrens Society press release | CIPD press release | CPAG press release | CPS press release | EDCM press release | Fawcett Society press release | Gingerbread press release | LGA press release | LITG press release | Mencap press release | NCB press release | NIESR press release | Resolution Foundation analysis | TUC press release | WBG press release | BBC report | Guardian report | Inside Housing report | Telegraph report
Date: 2012-Mar
An article examined the short-term effects of social spending on economic activity, using data for developed (OECD) countries from 1980 to 2005. An increase of 1 per cent in social spending increased national income by about 0.1 percentage points. The effect was similar to that of total government spending, and was larger in periods of severe downturns. Among spending subcategories, social spending on health and on unemployment benefits had the greatest effects.
Source: Davide Furceri and Aleksandra Zdzienicka, 'The effects of social spending on economic activity: empirical evidence from a panel of OECD countries', Fiscal Studies, Volume 33 Issue 1, Institute for Fiscal Studies
Links: Abstract
Date: 2012-Mar
A think-tank report said that there was a case for a significant short-term fiscal stimulus to boost the economy. Even though government borrowing was expected to fall below official forecasts for 2011-12, there were a number of 'downside risks'.
Source: Carl Emmerson, Paul Johnson, and Helen Miller (eds.), The IFS Green Budget, Institute for Fiscal Studies
Links: Report | IFS press release | Labour Party press release | BBC report | Guardian report
Date: 2012-Feb
A new book examined the consequences of the European Union Lisbon process and its successor, Europe 2020. It explored a broad range of economic outcomes and consequences for an array of policy areas, including employment services, labour migration policy, and pension reform.
Source: Mitchell Smith (ed.), Europe and National Economic Transformation: The EU after the Lisbon decade , Palgrave Macmillan
Links: Summary
Date: 2012-Feb
A think-tank report examined options for the opposition Labour Party's economic strategy. Contributors sought to identify an approach to the economy that could not only deliver growth but also achieve broader social democratic aims.
Source: Andrew Harrop (ed.), The Economic Alternative: The politics and policy of a fair economy, Fabian Society
Links: Report | Telegraph report
Date: 2012-Feb
A report examined the impact of the global economic crisis on models of economic governance in a range of European countries (including a chapter on the United Kingdom). The authors considered the implications for public spending, the welfare state, and labour markets.
Source: Steffen Lehndorff (ed.), A Triumph of Failed Ideas: European models of capitalism in the crisis, European Trade Union Institute
Links: Report
Date: 2012-Feb
A report examined the social dimensions of the new European Union policies on economic governance. It highlighted concern that the burgeoning debt crisis in Europe would develop into a 'massive social crisis', and over a 'worrying lack of solidarity' among member states and their citizenries.
Source: Gordon Bajnai, Thomas Fischer, Stephanie Hare, Sarah Hoffmann, Kalypso Nicola dis, Vanessa Rossi, Juri Viehoff, and Andrew Watt, Solidarity: For Sale? The social dimension of the new European economic governance, Bertelsmann Stiftung
Links: Report
Date: 2012-Jan
A report examined the problems in existing responses from within the European Union to the financial crisis, and put forward alternatives that were more effective and more socially just.
Source: Joachim Becker, Hermann Bomer, Tanja Cesen, Rolf Czeskleba-Dupont, Judith Dellheim, Trevor Evans, Marica Frangakis, John Grahl, Peter Herrmann, Roland Kulke, Jeremy Leaman, Mahmood Messkoub, Dominique Plihon, Werner Raza, Diana Wehlau, and Frieder Otto Wolf, European Integration at the Crossroads: Democratic deepening for stability, solidarity and social justice, European Economists for an Alternative Economic Policy in Europe (EuroMemo Group)
Links: Report
Date: 2012-Jan
An article examined change and continuity in recent social policy, contrasting the 'liberal collectivist' approach of New Labour with the 'reinforced neoliberalism' of the coalition government. Under the latter, the United Kingdom was witnessing a withdrawal of the state, a redrawing or abolition of minimum standards, and failures to meet changing patterns of social needs – combined with 'obtuse' pronouncements about the 'Big Society'.
Source: Damian Grimshaw and Jill Rubery, 'The end of the UK s liberal collectivist social model? The implications of the coalition government s policy during the austerity crisis', Cambridge Journal of Economics, Volume 36 Number 1
Links: Abstract
Date: 2012-Jan
A new book examined the size, uses, and importance of 'corporate welfare' – government programmes designed to meet the needs of business – across various welfare regimes in developed (OECD) countries.
Source: Kevin Farnsworth, Social Versus Corporate Welfare: Competing needs and interests within the welfare state, Palgrave Macmillan
Links: Summary
Date: 2012-Jan