Growth gets sucked up into profits as south west wages now more than 30% behind south east

It’s what we all suspected – money goes into profits not wages – yet who are the people in charge of our LEP? Those who suck up those profits! That’s the market economy.

“The UK is the most geographically unbalanced economy in Europe and needs radical reform, an IPPR think-tank report has concluded.

The study highlighted that 40% of the countries output is produced in London and the South East and average incomes in the North West, South West, West Midlands and Wales are now more than 30% lower than in London. …

It stated gains from growth have gone largely into profits rather than earnings, and the UK economy is now in the longest period of pay stagnation for 150 years.

IPPR noted that though GDP per head has risen by 12% since 2010, average earnings per employee have fallen by 6%.

Since the 1970s the share of national income which has gone to wages has gradually declined, from 80% to 73%, while the share going to profits has increased.

The wage share is now the lowest it has been since the second world war, said the report.”

http://www.publicfinance.co.uk/news/2017/09/uk-most-geographically-unbalanced-economy-europe

One thought on “Growth gets sucked up into profits as south west wages now more than 30% behind south east

  1. This is capitalism at its finest, “the market” operating according to the law of “supply & demand” except where regulation insists it does otherwise.

    Capitalism is the modern equivalent of Darwinism – the survival of the most ruthless.

    And this applies to both the sales market and the labour market.

    As a society, we have a choice:

    1a. To have a relatively unregulated sales market, where companies can charge more in the UK than they charge for the same product elsewhere (often technology products), or take advantage of people who are desperate (payday loans) and rake in huge profits at the expense of consumers (the so called “rip-off Britain”); or
    1b. We can regulate in order to ensure that consumers get a fair deal.

    2a. To have a completely unregulated labour market (where you can pay minimum wage for jobs that attract higher pay elsewhere in the country) and rake in huge profits to be paid to shareholders and senior management; or we can regulate to try to make the share of the money available fairer.

    This is the choice we make when we vote in General Elections. In 1979, before the Conservatives came to power under Margaret Thatcher, the top 1% of the population took home 5% of the UK’s GDP. In 2017, this has now risen to 15%. (Is it any wonder that this same 1% make huge donations (or sponsorship) to the Conservative Party? Their investments in the Conservative Party pay a hugely better return than any other investment they could make – especially when made by a corporation who can claim it off their tax bill.)

    Of course this means that the other 99% (i.e. you and me) shared 95% of GDP in 1979, and now we share 85% of GDP between us or in other words we are worse off. When you take into account the basic costs of living vs. disposable incomes, the swingeing cuts to benefits, increasing costs for health and social care, and inflation due to the collapse of the GB Pound, these figures are worse still.

    In the end, what it comes down to is whether the government sees itself as being in power for the benefit of their sponsors or for the benefit of the voters. Some governments argue that policies benefiting businesses rather than voters are the right ones, because higher profits for businesses translates into investment in jobs for the rest of the population – the trouble is that all the evidence shows that higher profits for businesses only translates into higher payouts for owners and senior managers, because “the market” dictates that it doesn’t need to be shared with employees – and of course anyone not working because e.g. they are disabled doesn’t get covered by the concept in the first place.

    That is Capitalism and we should not expect anything else unless the government steps in with regulations. But when the government is already focused on meeting the desires of their sponsors, just how likely is it that they will step in to ensure that the rest of us get a share?

    Like

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