Stagnation Nation - In Work Poverty, Inequality and Fragility in the face of Economic Shocks
A new report “Stagnation Nation” argues that a combination of low productivity & inequality has left average UK households £8800 worse off than people in five comparative countries.
The 150 page Resolution Foundation report finds that
“The UK has great strengths but is over a decade into a period of stagnation.” High levels of inequality, real wage stagnation and flatlining productivity have characterised the evolution of the UK economy for a long time.
Median incomes in the UK falling behind other countries
The report emphasises the importance of median income and median wealth when discussing the economics of inequality. Median household incomes in the UK are lower than in many other European countries. In 2018 - before the pandemic - they were 16 per cent lower than in Germany and 9 per cent lower than in France.
Power of large employers holds down wage growth
One factor pointed to in the report is the monopsony power of large employers in the UK labour market. The latest evidence suggests that wages could be between 15 and 25 per cent lower than they would otherwise be because of employer power over workers. The result is that the average worker in the UK today is losing out on almost £100 a week of earnings from their work. This has consequences not just for real living standards but also demand and profits for businesses supplying consumer goods and services, along with lower direct and indirect tax revenues for the government.
The Economy 2030 Inquiry available for download here is a collaboration between the Resolution Foundation and the Centre for Economic Performance at the London School of Economics, funded by the Nuffield Foundation.