Pondering polls, worrying about wages and considering class

Morning all,

This week has been full of ups and downs. The football was coming home, then it didn’t. The weather was miserable, then we got a surprise heat wave. A King’s speech in July? It feels like we’re about to go back to school for the new year, not hurtling towards parliamentary recess and the school holidays.

At least TOTC is back to its usual tricks. We’ve got election analysis, relationship tips and worries about wage growth for you this week. Chart of the Week looks at the wider implications of the Amazon union ballot.

Have a great weekend, and enjoy the sun while it lasts.

Mike Brewer

Interim Chief Executive
Resolution Foundation

Dissecting discontent. The mammoth new report from More in common (polled from more than 10,000 people) provides valuable insight on our peculiar ‘change’ election – a three-digit parliamentary majority resting on the lowest vote share for a single governing party in electoral history. The key takeaway? Barely more than a quarter of the public know that Keir’s father was a toolmaker. Ok but seriously… The country wants change, just like it did in 2016. And in 2019. On public services, the NHS will be the most important test that this Government can pass or fail (as Paula Surridge noted in our event last week) as they endeavour to prove themselves to a sceptical electorate. Battling political disengagement will be essential, and there’s plenty to be done on that front. Three in four people (74 per cent) now believe that Britain is rigged to serve the rich and influential. I also have to include an honorary mention for their gaffe-o-meter.

Dipping dynamism. Think we’ve got a dynamic economy? Think again. Recent ONS data on local employment dynamics demonstrates a trend we examined in Ending stagnation. In a nutshell, jobs are being created (and destroyed) much more slowly than they used to be. That’s bad news for productivity, because we need to be moving workers from less productive to more productive firms. Instead, economic dynamism fell between 2004 and 2022 in almost all regions. Why? The biggest decline is due to fewer existing firms expanding to new sites, a trend which started with (you guessed it) the 2008 financial crisis. So, are employees themselves feeling increasingly reticent about moving jobs? We heard in our research last year that one reason people in cr*ppy jobs don’t move is that they’re more amenable to the devil boss they know – especially if they have a zero-hours contract. That’s why earlier access to employment rights – and unemployment insurance when things don’t work out – could get workers moving, boost dynamism, and make our economy more productive.

Reliable relationships. This curious paper investigates the connection between job stability and marital stability, and is another one for the There Is Nothing Economists Can’t Come Up With a Model For filing cabinet. The authors show that people who spend longer in their job also stay with their spouses for longer. Cause and effect? Well, they actually chalk this one up in part to the presence (or absence) of a particular social skill which seems to make jobs (and partners) easier to keep. Unfortunately, they don’t go into great detail about what makes up this “latent ability to maintain stable relationships” – I assume they will make that a little snappier before releasing the accompanying self-help guide? So, if you’re struggling on that front you will need to keep looking elsewhere for answers.

Worrying wages. Official data this week on inflation and the labour market will have prompted head scratching at the Bank of England. The headlines look pretty good – CPI bang on 2 per cent, and real wages growing at their fastest rate in over a decade – much needed given recent pay traumas. But things don’t look so rosy under the bonnet – domestically-generated inflation remains stubbornly high, while pay rises are not productivity-enhanced and therefore could be inflation-generating instead – reducing living standards further down the track. There are similar warnings in the recent missive from the Bank Underground which finds ‘trend’ wage growth is rising, with the estimated trend currently sitting a little above the headline rate of wage growth. None of this will be welcome news to people looking to re-mortgage in the near-term if it muddies the picture on when to cut interest rates.

Considering the climate. This week the Climate Change Committee published their progress report. To cut an in-depth document short, it says we’ve got room for improvement – and it won’t be cheap. We’ve made good progress over the past decade, but the next ten years will see us needing to get used to faster, and more disruptive, emissions savings – and we’ll need to be mindful of how those changes affect low- and middle-income households. The major shifts needed are in transport and heating, spending on which already made up more than 12 per cent of low-income households’ budgets in 2021. We need to go from 1 per cent of homes having a heat pump to at least 10 per cent, and we’ll need to switch to nearly 100 per cent electric vehicles. There’s plenty of detail on how we can deliver a fast, fair transition (bringing back the 2030 ban on sales of non-electric cars would increase supply in the second-hand market and help lower-income households to switch, for example), but it simply won’t happen without investment. Good thing we’re coming together on Monday to discuss the challenges, and opportunities therein.

Chart of the week.

Big news for Britain’s workplaces across this week. We learned from the ONS that the jobs market is cooling (vacancies down, unemployment up). The new Government laid out plans in the King’s Speech to shake-up the workplace – boosting access to sick pay, extending a host of employment rights and introducing a new single enforcement agency. And those enhanced statutory rights may be needed for Amazon workers in Coventry, as they failed by a whisker to secure union recognition at the warehouse. Why was this such a big deal? For a start, a successful ballot would have led to Amazon – (in)famed by their efforts to thwart union recognition – recognising one for the first time in the UK. And second, as Chart of the Week shows, it would mean the GMB breaking into one of the least unionised sectors of the economy. Barely one-in-ten workers across wholesale and retail are union members (and many of those are based in supermarkets…) – a far cry from many areas of the public sector where over one-in-three are unionised. Working conditions in warehouses aren’t great – recent RF research found that one-in-four workers are low-paid, and over one-in-four are on some form of insecure work contract. Unions are struggling to address these conditions. Enhanced statutory rights should help. But with two-in-five workers in the warehousing not UK-born, and with migrant workers particularly vulnerable to firms breaking employment law, those rights will need to be properly enforced too.