Weekend Economists Kickoff the Season, September 6-8, 2013

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38. Give the workers a fair deal

http://www.theguardian.com/commentisfree/2013/sep/07/give-workers-fair-deal

For economists, revising up is not something they have had much cause to do in recent years. But last week the whisper that Britain might be experiencing the signs of a fragile recovery began to drown out warnings about household debt and housing bubbles. Optimism reappeared; growth was a possibility. The question, however, is whose growth? As the American economist Joseph Stiglitz points out: "A large pie doesn't mean that everyone – or even most people – gets a large slice."

Even before the recession, the British economy was displaying profound structural faults. The balance between service-based industries and manufacturing was weighted too far in favour of the former. Less often discussed in the last few years of the Labour administration was another imbalance that was taking shape from around 2004. Britain was moving, even then, toward a low-skill, low-pay and insecure labour environment. More recently, that trend has gathered pace as zero-hours contracts, underemployment and part-time work have taken hold.

Increasingly, we have also had a disconnect between falling wages and rising productivity as the top 10% pull away ever faster from the rest of us. Across the industrialised west in particular, capitalism is failing to dispense its largesse in the way that it did in the 1950s, 60s and 70s. The squeeze is on, and not just for lower earners, but for middle earners too.

Endless columnists and books have decried the death of the middle class, both here and in the US. Few have articulated this better than President Clinton's former labour secretary, Robert Reich, whose documentary, Inequality for All (featured in the Observer earlier this year) perfectly encapsulates how unfairly the spoils of capitalism are being spread.