Labour needs a full incomes policy….
Something of a dutch auction has begun between Labour and the Conservatives over executive pay. Labour has today packaged it with a call for a more ‘responsible capitalism’ and the Conservatives are expected to announce policy initiatives later in the week. Of course, action to tackle excesses at the top are always welcome but they must be part of a package of measures aimed at tackling the problem of income inequality.
It is no accident that the worlds leading economies are groaning under a mountain of government – on the marco level – and personal debt – on the micro level – at a time when the difference between the pay packets of the rich and the working poor is growing. This has become and unsustainable burden on the economy. Obviously, as the working poor and even above them, the middle classes have struggled to keep pace with the rich in previous years they have had easy access to credit – something they took advantage of. However, the increase in their incomes has struggled to even keep pace with repaying their debt and this is one of the creators of the mountains of bad debt banks have been forced to write-off.
Curbing the excesses of the well-off is therefore to somewhat gloss over the real issue which is the falling incomes of those outside the charmed 1%. Indeed, the cynical might even regard it as a smokescreen – a ruse to divert people’s attention and popular anger away from focusing on the real issue. Our incomes policy needs to be geared towards the democratic sharing of socially produced wealth with all.
Miliband has previously championed the living wage, however, it is hard to ascertain whether that policy will make it through (it may, as a token grassroots pleaser). Even if it does, its voluntary nature robs it of any really meaningful effectiveness in terms of being a panacea for our economic ills. If it is to mean anything and have any widespread beneficial economic effect, it must be compulsory.
A proper, rounded, incomes policy makes sound economic sense. People need more money coming in to a) begin the process of debt repayment and b) to consume at a rate that is beneficial and supportive of the economy. As things stand, a is partially assisted by low-interest rates but in regards to b, we are taking steps backgrounds due to shockingly high inflation and, of course, if people are struggling consume essentials (due to inflation and depressed wages) then they are hardly likely to start paying off their credit card are they. All the signs are that this problem is only going to get worse and people will be crushed in the vice of high inflation, which means in any case many people’s wage rise will be in real terms a pay cut.
Labour’s income policy therefore needs to be much more rounded. Any High Pay Commission should also be briefed to consider low pay and, crucially, measures to tackle wage inequality. The living wage must be compulsory and fully legally enforceable. Not only is this the right thing to do principally, it is also the right thing to do economically. The question really is then, does the leadership have the courage to finish what it started and really strike a blow for social justice and against a particularly pernicious form of inequality that is crippling our economy.