Economic Festive Cheer

It’s Christmas Eve, and as we stagger toward the end of another year, I thought I’d point out this upbeat assessment about where we’re heading in the UK job-wise.

The Institue of Economic Affairs has published this interesting piece putting to rest many of myths about the free market system. Maybe not one to take to bed after too much mulled wine, but it does point out that, as I often say on this blog, things ARE getting better.

A couple of points from the piece’s author, Christopher Snowdon:

    • Wages – Over a century’s worth of growth has led to a steady rise in wages across the board. Despite perennial claims that the poor get poorer under capitalism, government figures show that in the UK average real wages have doubled for full-time workers and come close to doubling for part-time workers since 1975. The percentage of full-time workers earning above the national minimum wage has also increased, 98% earning at least £6.19 per hour in 2013 compared to only 55% earning more than this amount in 1975 in real terms.
    • Income – Between 1977 and 2011/12, the incomes of the poorest 20% of individuals rose by 93% in real terms. The recent recession saw the incomes of the richest fifth of households hit hardest, their disposable income falling by over 5% in real terms between 2007/08 and 2012/13. According to ONS figures, during the same period average incomes of the poorest fifth rose by over 3% in real terms – the provision of state benefits cushioning declining pay.
    • Inequality – Rising income inequality and relative poverty are often mentioned by critics of capitalism. Neither offer a meaningful measurement of whether or not the poor are better off. Having peaked in 1990, income inequality in Britain has been declining ever since. Despite real disposable incomes of the poorest fifth of households rising by 50% between 1975 and 2005, the number living below the relative poverty threshold increased from 13% to 15%. Reductions in inequality and relative poverty typically coincide with periods of general impoverishment which harm the poor.
    • Social mobility – Social mobility in Britain has not ground to a halt, mobility remaining broadly constant in relative and absolute terms for at least 100 years. The majority of those that are born poor move swiftly up the income ladder, almost all becoming wealthier than their parents. Intelligence and ability play an important role in determining individual progression.
    • Working hours – Average working hours for British employees continue to fall. According to OECD figures, over half of UK workers are working less than 40 hours a week and fewer than 12% work more than 50 hours a week. Only those on high incomes have experienced an increase in their working week.
    • Economic growth – Sceptics of further economic growth should bear in mind the benefits to be had from ongoing prosperity. Between 1965 and 2000, average incomes worldwide have doubled – contributing to improved living standards and a substantial reduction in poverty. Aside from job creation and the boost to wages, further economic growth is vital in order to afford increasingly burdensome welfare spending.
In 2000, the average person in full-time employment was clocking in 37.7 hours a week. By 2011, that was 36.4 hours, with fewer than 12 percent of us working more than 50 a week. Back in 1992, it was 38.1 hours. It’s progress. Slow, but getting there.

Yes, things are getting better in the workforce. It doesn’t always feel like it, but I think we’re heading in the right direction.

Happy holidays.