Economic recovery is sluggish by historical standards

The latest economic report from the National Institute of Economic and Social Research (NIESR) puts a realistic dampener on the economic ‘recovery’ for most workers.

They say workers will have to wait six more years before their inflation-adjusted wages are back at pre-crisis levels. Average real wages are still at 2004 levels and it will take until 2020 before they return to their 2009 peak. They also warn that the gradual rise in wages could take even longer if Britain's productivity performance, which has been "abysmal" in recent years, did not improve. This reinforces the warnings we highlighted last month when the latest unemployment figures were released.

NIESR identify consumer spending as the main driver for growth, which is expected to rise by 3.4% this year. This is largely a product of a housing bubble, particularly in the south, encouraged by government schemes such as Help to Buy. While average UK house prices will rise by 6.3% in 2014, it is then expected to almost halve to 3.2% in 2015, and to between 0.5% and 1% per year over the period 2016 to 2018.

This domestic growth masks poor export performance, as domestic demand for UK and imported goods outweighs foreign demand for UK goods. NIESR said; "In the near term, we expect the deficit on the UK's external trade balance to widen."

They are not expecting any increase in interest rates, despite better headline employment figures. That at least will be good news for house owners.

Overall the report predicts global growth of 3.7% in 2014 and 2015 - an improvement on growth of 3.1% last year, "but still a sluggish recovery by historical standards". 

The legacy of austerity economics is clearly going to be with us for some time.

School support staff do make a difference

New research shows the value of pupil support staff in schools - particularly for pupils with low attainment levels or from disadvantaged groups.

The Education Endowment Foundation (EEF), a UK charity set up in partnership with the Sutton Trust has published the first of six reports funded by the English department of education. Another 66 studies involving 450,000 children are ongoing at one in ten schools in England. The studies – based on trials with 6,800 pupils at 238 schools – focused on programmes to help children at risk of arriving at secondary school without the level of literacy and numeracy expected of them. Some of the programmes were seen to be more effective than others.

One report called Catch-up Numeracy, an intervention in which pupils struggling with maths had two 15-minute sessions a week for 30 weeks, found that the one-to-one time with teaching assistants led to a significant gain in numeracy skills.

The research shows that Teaching assistants can help children improve literacy and numeracy skills if they work in small groups with specific pupils known to have low attainment levels. The findings appear to contradict previous research on teaching assistants, which had suggested that they did little to help struggling children.

Slow progress on improving care for older people

Reform of care for Scotland's older people needs to accelerate according to Audit Scotland.

As the Public Bodies (Joint Working) Bill moves towards the end of its legislative journey, Audit Scotland's report 'Reshaping care for older people' is a timely reminder of the challenges. Moving the managerial deck chairs around is only a small part of the solution.

The report reviews progress three years into the Scottish Government's ten-year plan to improve health and social services for people aged 65 or over. It is one of Scotland's biggest and most complex programmes and involves NHS, local government, voluntary and private bodies. The Government is supporting it with a four-year, £300 million Change Fund.

The report says:

• Improving care for older people and joining up services has been a policy focus for several years but progress has been slow, and monitoring of its implementation and impact needs to improve

• The Scottish Government needs to work with its partners to clearly plan how resources will move from institutions such as hospitals into the community. They also need to better understand why activity and spending on services for older people varies across Scotland

• The Change Fund has brought bodies from the different sectors together to develop and agree joint local plans to improve care, and a number of local initiatives are underway

• The information needed to make decisions and assess their impact on older people is not nationally available. Bodies need to improve and maintain data on costs, activity and outcomes for health and care services.

As usual with Audit Scotland reports, they are strong on analysis, bringing together the available data in a presentable format. This info graphic sets out the key data very helpfully.

The weakness is that the recommendations focus on getting public bodies to produce more data. Important though this is - it misses where the key focus needs to be.

For example, the funding of additional community care is almost entirely missing from the financial memorandum to the Bill. It has been assumed (Christie Commission) that the funding is coming from reducing unplanned admissions to hospital, calculated at £1.5bn. However, health boards are now arguing that far from reducing beds, they need more, and the Health Secretary has said he agrees.

The next problem is that care for older people in the community is little short of a national disgrace. The big numbers in this report do not reflect the problems facing home care staff in particular. Many are paid well below the living wage, employed on zero or nominal-hours contracts and given insufficient time to provide a quality service. The BBC File on 4 programme covered the cost of delivering care in England earlier this week. The same problems are all too evident in Scotland.

Numbers in this report are useful, but quality outcomes are more important.

Transforming Scotland Through Free Childcare

Last September we blogged on two reports from Save the Children and IPPR on how what parents need and want from childcare. UNISON is a long term supporter of free publically delivered childcare as a route to transform Scotland.We are therefore delighted that the debate in Scotland has now moved on to “when” rather than “if” for free childcare.

UNISON represents workers who need childcare and workers who deliver the childcare. This largely female workforce faces all the same challenges as other working women in balancing their own caring responsibilities with work and the high costs of childcare. That is why UNISON believes that the promised expansion of childcare has to be publically funded and delivered. Free childcare cannot free some women through supporting them to work and develop their careers while condemning other to long hours on low pay working in childcare.

Delivery will require substantial funding. We know this will pay for itself through increased tax revenues and cuts in benefits spending. Childcare workers need flexible part-time working. Many choose this work because it fits in with their own caring responsibilities. There needs to be a substantial increase in staff numbers to cope with both the extra hours the current children will now attend for but also the extra children who take up the service. As many will want to work part-time the number of actual people will be higher than the FTE figure. We are therefore not convinced that the number of staff required to deliver expanded childcare is being properly calculated and costed.

Quality of childcare depends on the skills of those who work there. This will require training and ongoing professional development. Pay must reflect the skills and experience required to do the job. Cuts and centralisation in FE will impact on colleges’ ability to delivery this training. Meeting even the longer term aspirations requires investment and planning now.

The childcare workforce, particularly in the private sector, is not well paid. The skills required to deliver high quality childcare, as with much work traditionally done by women, are not widely recognised or rewarded in the market. There has been progress in the public sector and one of the key reasons for our support for ensuring that the public sector delivers childcare is to ensure that this is not pulled back by expanding the low paid private sector.

Gender segregation in the workforce and its impact on the gender pay gap is a key issue in Scotland and just as there needs to be support for girls in schools to consider a wider set of job options, boys should also be encouraged to consider childcare as a career.

Free publically delivered childcare can transform Scotland. With proper investment it offers the opportunity to take pressure off families by enabling more women to take up paid work and ensuring they have more of their pay to spend or save. This will also ensure that working mothers can continue to pay into pensions, preventing poverty in old age. More than that through creating high quality care and education and seamless transitions through to school it will give children the best possible start in life. This will bring savings to a range of public services in both the short and long term. There is a lot more to be won than cutting the benefits bill and increased income through taxation.

Making work better

The Smith Institute is undertaking an independent inquiry to identify what government, employers, employees (and those that represent them) can do to improve working life in Britain. The focus is on what makes for a better workplace and better employment. What government policies and actions by employers, management and unions would make a difference; and how can we aspire to a high-skills, high-productivity, high-wage economy where more people are satisfied with their work and have greater opportunities and more control over what they do?

Amongst the topics for consideration are:

 Productivity and performance: Both employers and employees should be the beneficiaries of rising productivity. Which workplace practices are associated with high productivity? How widespread are these practices in the UK? To what extent is productivity related to voice and industrial citizenship? Are highly productive workplaces necessarily good workplaces? What steps are needed to ensure that wages rise in line with productivity?
 Making a living: What can be done to tackle in-work poverty and improve pay for those on low to middle incomes? How can the National Minimum Wage and other employment rights (equal pay) be enforced more effectively? What other measures might be taken, such as extending the Living Wage to more low paid workers? Is there a case for a new and systematic approach to standard setting in public procurement (“Fair Wages”)? What can be done to secure more ‘passporting’ or rights and benefits at work?
 Opportunity and progression: What can be done to enhance the quality and value of employment and improve personal development at work? How can we get more young people into (suitable) work and what should be done about volunteering and unpaid internships? How can we improve opportunities for promotion and career advancement? What can we learn from training systems in other countries; what can be done to ensure that employers fully utilise the skills of all their staff? How can we best combat discrimination at work?
 Getting people back to work: As we move out of recession how can we get more people back to work and combat under-employment? At the bottom of the labour market there seems to be a revolving door from unemployment, to bad work, to unemployment. Do other countries achieve better results through their unemployment insurance systems and active labour market programmes? How can we improve the apprenticeships system and graduate employment?
 Security at work and work-life balance: How can policy tackle long-hours cultures and the lack of good quality part time jobs? How big a problem is casualisation of work and what can be done to combat zero-hours contracts? Is poor corporate governance and boardroom culture at the root of the problem, and if so what should change? What can be done to ensure that men and women share paid and unpaid work more equitably? How can we ensure that workers are offered a range of working patterns consistent with their caring and other domestic responsibilities?
 Working in the public services: What should be done to improve the quality of work across the public services so that job quality and organisational performance are enhanced at a time of public expenditure constraints? How can frontline professionals be empowered to innovate and be given an effective voice; how can the public sector be a leader on standards of employment?
 Employment relations: What are the barriers to employee engagement? How can policy support innovative trade union approaches to the modern workplace? What can we learn from good practice in the UK and Europe? Is there a case for developing a robust works council system in the UK?
 Machinery of government: is there a case for reforming and streamlining the different institutions, agencies and regulatory bodies involved with the world of work? Is there a need for a tougher (co-ordinated) approach to enforcement and compliance?

Comments to:

Making Work Better Inquiry
C/O The Smith Institute
Somerset House, South Wing
Strand, London, WC2R 1LA
Tel: 020 7845 5845
Email: makingworkbetter@smith-institute.org.uk
Web: www.smith-institute.org.uk

Low Pay in the Public Sector

Low and falling pay is ruining people’s lives and storing up a range of problems for our future. The New Economics Foundations report Raising the Benchmark: The role of public services in tackling the squeeze on pay (commissioned by UNISON) clearly lays out the extent of low pay in Britain. More importantly the report contains important recommendations to free people in work poverty.

At least one in five workers in the UK economy earn too little to live on (less than £7.47 per hour)
• More than half of individuals living in poverty live in a household where at least one adult works
• One million public service workers are on low pay: And it’s getting worse
• Workers on low and middle incomes are experiences the biggest fall in living standards since records began
• Average workers wages have fallen by £1300 per year under the coalition government
• Those in the public sector are on average £2073 a year worse off
• The report is full of really useful detail on the problems caused by increases in the cost of living alongside wage stagnation.

There is also an excellent section on the myth of the public sector pay premium. NEF also highlight IMF research which indicates that the impact of public spending on the rest of the economy is stronger than previously thought. “This means squeezing public services wages locks us into a more fragile economic future”

Recommendations
• Active support at all levels of government to ensure the living wage is paid by employers across public service supply chains, directly benefiting 1 million public service workers today.
• Government to lift the pay cap, which has resulted in pay in public services falling by more than £2000 a year on average in real terms since 2010.
• Policy action by government to establish robust fair wage resolutions determining benchmarks for employment conditions across public service supply chains.
• Active support by government for collective bargaining of pay and employment standards throughout public service organisations and businesses.
• Action by policy-makers, commissioners and employers to scrap zero-hours contracts in key sectors such as social care.
• Implementation of new indicators, such as mandatory reporting of top, middle and bottom pay by employers across public service supply chains.

The report is an excellent source of information to support campaigns for improved wages in the public sector and importantly, through better public sector procurement rules, across the wider economy.

Why government claims about pay are mince

It’s not been a good week for government statistics. Police crime data, NHS waiting lists and now, daftest of all, a claim that pay is going up faster than inflation.

This is of course a UK Government spin release, not an official ONS data stream. What they have done is to argue take-home wages increased by at least 2.5% once tax cuts were taken into account. That is slightly more than the Consumer Prices Index (CPI) inflation rate of 2.4% in the year to April 2013.

This is simply a case of picking the statistics that make your case and ignoring those that don’t. Including tax cuts and not benefit cuts and taking CPI rather than RPI are the most obvious examples. Even RPI doesn’t fully reflect the increased cost of essential purchases that low paid workers have to focus on, as we have highlighted.

Labour's shadow treasury minister Cathy Jamieson got it right when she said: "These highly selective figures from the Tories do not even include the impact of things like cuts to tax credits and child benefit which have hit working families hard. Under the current government, real annual wages had fallen by £1,600 since 2010 and figures from the Institute for Fiscal Studies showed that families are on average £891 worse off as a result of tax and benefit changes since 2010".

The respected IFS also pointed out on R4 this morning that the average weekly earnings index showed wages rose, "quite a lot less quickly than inflation in the most recent months". Their own analysis suggested that, "if the recovery takes off and continues as expected, people will start to see their incomes rising by 2015... but they will be well below where they were six or seven years ago".

This is the same analysis we have seen from the Office of Budget Responsibility medium term forecasts for pay growth. Again we covered this data earlier this month.

As I set out in an article in the Scotsman, British workers have experienced the longest real wage pay squeeze since 1870. Inflation has risen faster than wages for almost 43 months. The share of the economy going on wages continues to decline. In the 1960s and 1970s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. It is no coincidence that, for the first time, we have more in-work poverty than out-of-work poverty.

The problem for government spin doctors is that workers can read their own pay packets and supermarket bills. So they know this is just mince!