Looking for Growth!

16 Jan

The key issue facing our economy is how we can get elements of growth in the most sustained contraction since the 1930s. We now hear the constant mantra – or in political jargon, ‘the line’ – of how we can’t reverse the cuts; tough public spending rounds are here to stay; we need a fairer distribution of what is left in the ever-dwindling money-pot, and, we have got to stick to the vast majority of the Tory deficit plan no matter the social destruction this unleashes. This of course ignores the fact that this is a self-enforced deficit reduction straight-jacket!

The drip-drip effect played out in the media in order to be ‘credible’ means what’s left is debating an ever-narrowing number of options on the table of how we try to stimulate our economy. It does a massive disservice to those in unemployment, in poverty and struggling to make ends meet.

If we have the political will to face the root causes of the crisis, there are many potential solutions: a financial transaction tax; resisting the corporation tax cuts while companies hoard money in their accounts to the tune of up to £70 billion; addressing tax havens and evasion, and, applying constant bonus taxes on the Directors of companies who wrecked our economy until the debt they have caused is paid back.

There is an extensive list of potential taxes and levies which should be explored such as a Land Value Tax which can help to grow our economy. However, you don’t see this getting debated much because our political institutions and major parties seem wedded to accepting neo-liberalism or reigned-in capitalism.

A policy which has gained a lot of traction is a Living Wage. The gap between rich and poor has doubled in the last 30 years. It doesn’t take a genius to work out if there are fewer people in employment then those in employment must have higher wages in order to reflate the economy in order to consume products which in turn creates demand for production.

In Scotland the long-standing campaign for a Living Wage has intensified over the last year with the introduction of a Living Wage rate of £7.20p/h (uprated from £7.15) for all directly employed workers in Glasgow City Council and West Dunbartonshire Council. As part of their manifesto commitments Scottish Labour and the SNP pledged to roll-out the Living Wage.

Labour pledged to roll it out to all public sector workers while the SNP proposed to extend to all NHS and Government Agencies in addition to all Government workers who already receive it. An Inquiry is taking place in the Scottish Parliament at the moment on the Living Wage which our Scottish Secretary Pat Rafferty gave evidence at in December 2011.

Statistics show that in 2009 there were 623,000 people employed in the public sector in Scotland, of which approximately 33,000 (5 per cent) were estimated to earn less than £7 an hour. By way of comparison, approximately 18 per cent of workers in the Scottish economy as a whole were estimated to earn less than £7 an hour during 2009. This shows why we can’t just restrict this policy to the public sector. We need to find ways to inflate the wages of workers across all sectors of our economy, thereby putting spending power back in people’s pockets and stimulating the economy.

The Scottish Government directly controls the pay packets of thousands of Scots through its various agencies, bodies and sub-contracting arrangements, yet they are failing to utilise the significant powers they have. There is no excuse for inaction. If the Scottish Government is serious about the Living Wage then they have got to lead by example. Otherwise, what hope have we got of the private sector following suit.

Unite Scotland’s ‘Making Devolution Work’ paper explores potentially how we can extend the concept of a living wage beyond the public sector where 77 per cent of all Scottish workers are in employment. Sectoral forums – the key strand of this strategy discussed at length on our website – also discusses how we can prevent public services being outsourced to the private sector. It would prevent private sector employers’ under-cutting their public sector counterparts paying the Living Wage.

I’ve never agreed with the London Mayor Boris Johnson in my life but I will make an exception, he said: “Paying the London Living Wage is not only morally right – with the potential to massively reduce child poverty in London- but also it makes good business sense. What may appear to a company to be an unaffordable cost in a highly competitive market is more appropriately viewed as a sound investment decision.”

If a Tory Mayor can say this then it is time for the Scottish Government to get moving by introducing a Living Wage for the whole public sector and supporting sector forums to help extend it to the private sector – not today but yesterday.

 

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