Economic recovery may miss low and middle earners

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A report published by the Commission on Living Standards has predicted that millions of poor and middle-income households may be bypassed by any economic recovery.

The group believes that due to the demise of administrative and manufacturing jobs in the UK the quality of life could stagnate for the next decade. They suggest that the answer is to implement state subsidies to boost employment to avoid any further job shortages.

The commission was brought together by the Resolution Foundation think tank and they state, “On current trends the outlook for the bottom half of the working population is bleak even once growth returns.”
“This stagnation of living standards can be averted if action is taken.”

“Success in boosting low pay, raising skills, and increasing female employment could see a typical middle income family better off by £1,600 (after inflation) a year by 2020.”
Despite recent improvements in the economy during the third quarter of this year the economy’s annual output is still no higher than it was at the start of 2007.

A recent study by the Office for National Statistics (ONS) has shown that the combined effects of the recession, high unemployment, stagnating wages and rising prices has dramatically cut living standards. The study proved that by taking inflation into account, income per head has decreased by more than 13% since the start of 2008.

As a result of the findings by the Resolution Foundation they have suggested a series of methods to ensure that economic recovery is not concentrated on the wealthier half of the population. These methods include ideas such as state subsidies for cheap childcare, national insurance contributions not paid by workers aged 55 or over and reducing council tax bills for cheaper properties by increasing the tax on expensive ones

Chairman of the Resolution Foundation Clive Cowdery said, “There remains far too little debate about whether growth will benefit the broad majority of people.”
“This will not happen automatically but… things can be done to ensure the benefits of economic growth are shared by all.”

Phil Bentley of British Gas described that part of the underlying problem was that not enough companies were investing in improving the skills of their employees. He stated, “A lot of companies are not investing in the skills as they used to. Our engineers get poached by other companies that aren’t investing,”

“One of the things the government could do is give more support to recognise apprentice schemes.”

David Willetts, the universities minister agreed with the comments and added, “The government is creating more apprenticeships to try to have more people in those middle-income jobs, which is where this report identifies the squeeze is happening.”

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