The Great Debate UK
Superstar economics: It’s all showbiz now
By Laurence Copeland. The opinions expressed are his own.
It seems barely a week goes by without another shock report about the ever-widening gap between those at the top of the earnings distribution and the rest of us. The facts are by now well-established. Throughout the Western world, but most noticeably in Britain and America, the earnings of the top one or two percent are accelerating into the stratosphere, leaving the middle class a long way behind, and the working class completely out of sight. How can one explain this global phenomenon?
Academic economics seems to be taking a surprisingly long time to reach a definitive answer, but I suspect there will turn out to be two long term trends at work here.
First, globalisation has doubled or tripled the supply of unskilled and semi-skilled labour. As long as China remained locked in Maoist isolation and the Indian economy had to carry the full burden of the Licence Raj, their respective workforces were shut off from the global labour market. The fact that products could theoretically be manufactured far cheaper in those countries was unimportant, because in practice Western firms could never take advantage of their rock-bottom labour costs.
Now that they have opened up and it is possible to outsource manufacturing to China and the paperwork to India, there is less and less left for our workers and middle-managers to do – unless, of course, they are willing to work for more competitive (i.e. lower) wages.
Moreover, the second phase of this transition is well underway, as the emerging economies start to exploit their vast pools of underemployed (and often excellent) graduates to move up the value chain, where they increasingly compete with our engineers, programmers, and even lawyers and doctors.
All over Europe and North America, people are asking: where will it all end?
Japan lags behind in gender equality
-Atsuko Kitayama is a a Reuters translator and correspondent based in Toronto. Reuters is hosting a “follow-the-sun” live blog on Monday, March 8, 2010, International Women’s Day. Please tune in.-
Japan has quite a way to go to narrow its gender gap and come closer to matching the disparities found between the sexes in other G7 countries, statistics show.
According to the 2009 United Nations Development Programme’s Gender Empowerment Measure, the world’s second largest economy ranks 57th out of 109 countries in political and economic participation for women, with female legislators, senior officials, and managers totaling only nine percent of its workforce.
The same statistics rank Germany 9th, Canada 12th, United Kingdom 15th, France 17th, the U.S. 18th and Italy 21st, while the top four spots are taken by Nordic countries.
The World Economic Forum’s 2009 Global Gender Gap Index, which also tracks gender inequality, shows that Japan ranks 101st out of 134 countries, far behind all its peers.
The situation in private corporations is also lackluster. The latest study by Japan’s Gender Equality Bureau of the Cabinet Office found that women accounted for only 4.1 percent of department managers in 2008. The number increased from 2.1 percent in 1999, but it still remains low.
OECD Secretary General Angel Gurria, shared his assessment on gender inequality during his visit to Japan in November 2009, saying the country is not making the most of women’s talents when it comes to the workforce.
Battle over wages: the male-female wage gap
- Alison Steed is the editor of the personal finance website for women and families MyMoneyDiva.com. The opinions expressed are her own. Reuters will host a “follow-the-sun” live blog on Monday, March 8, 2010, International Women’s Day. -
Women have often been given a bad deal when it comes to work, whether we like it or not.
That, to me, is encapsulated in the fact that despite there being an Equal Pay Act in place in the UK since 1970, women still earn on average 17 percent less per hour than men for doing the equivalent role in the workplace, according to figures from The Fawcett Society.
Let’s not get confused here. This is not about women working part-time when men are working full time. This is the average gap for men and women working full time.
If you want to talk part-time, no problem – the figures actually get worse. The average woman is being paid 36 per cent less – more than a third – than a man doing the equivalent part-time role. When you get into London, this rises to 45 per cent – almost half, according to The Fawcett Society.
So what is going on here? A number of things really. Experts estimate that 40 per cent of the pay gap is down to old-fashioned discrimination on the part of employers. Add to that the reality that women are still, in many cases, primarily responsible for the role of caring for the family, and it makes it hard to do the extra hours that some men can take for granted.
I’m sure plenty of people will disagree with what I am saying, many will agree – but let’s get one thing clear. This pay gap is still here because of two things: the government is not enforcing pay equality at present, even though we have had 40 years – and governments of a variety of hues – who could easily have sorted it out.
MEN have lost battle for Jobs as women get them sigh by being allowed to tender cheaper IT IS JUST NOT FAIR
A tough spring in store for the pound
- Jane Foley is research director at Forex.com. The opinions expressed are her own.-
The pound has started the year on a negative note. Ongoing concerns over the budget deficit, an impending general election, the prospect that the Bank of England (BoE) may yet increase quantitative easing (QE) and a drop in consumer confidence are all clouding the outlook.
That said, sterling has already paid a high price for its weak fundamentals. In 2009 EUR/GBP averaged 0.8909, this is 17 percent higher than its average in the 12 months leading to the Northern Rock crisis and 35 percent above the average rate between 2000-07.
A lot of bad news is in the price but a sustained sterling recovery is unlikely until there are concrete signs of resolution to the UK’s deficit problem.
In the midst of the deficit concerns, the government is still too uncertain about the prospects for economic growth to stiffen its commitment to austerity and, according to opinion polls, the opposition is not enjoying a decent enough lead to ensure it of election success.
This has left the pound worried by the possibility that this spring’s general election may produce a hung parliament and sensitive to the brutal suggestion from Pimco that if Labour return to power the UK may suffer a credit downgrade.
On a more positive note, the UK most likely emerged from recession in Q4. This is hardly a cause for celebration, however, since most major economies emerged in Q2 or in Q3.
The fundamentals in much of the Eurozone are truly awful and the pound is likely to benefit from this once this realisation has fed through to major holders of Euros. The big story of 2010 will be that the Eurozone will be tested to the point of destruction by the problems that exists within Greece, Spain, Portugal and Italy as well as the new members in the east. France, Holland and Germany will be unable ( and unwilling ) to subsidise these economies in the long term.
Government must act on bold promises to UK manufacturers
- Steve Radley is Director of Policy at EEF, Britain’s manufacturers’ organisation. The views expressed are his own.
This week the index of manufacturing activity in the UK moved into growth territory for the first time in more than a year. While that does not necessarily mean that the recession is over, it does suggest that we should be thinking a bit more about what sort of recovery we are likely to see and how well placed the UK is to meet it.
A common assumption is that a UK recovery will be export-led, taking advantage of a cheaper pound and the large stimulus packages which are likely to lift overseas markets such as China and United States out of the global recession faster than in this country. Looking longer-term, shared global challenges such as security, ageing populations and slowing climate change and adapting to it will create major opportunities for UK companies, particularly in manufacturing.
This raises questions as to how well equipped we are to take advantage of these opportunities. On the positive side, UK manufacturing has become much competitive in recent years with productivity gains outstripping most of our major competitors. A greater focus on innovation, design, niche products and service offerings has helped UK firms shift away from competing on price terns with lower wage cost countries. At the same time, though, we have been slow to take advantage of growth opportunities. Other European countries have made faster inroads into rapidly expanding Asian markets, while nations such as Germany, Denmark and Spain have stolen a march on us in the onshore wind industry, despite the substantial advantages our physical geography provides us.
There are some important lessons from this for manufacturers themselves and some steps that they will need to take. Companies will need to be more ambitious in exploiting the opportunities from a world economy set to double in size in the next 20 years and to develop a long-term strategy to achieve this. They will need to increase their focus on investing in the areas where they can best add value, whether this is in new equipment, research and development, skills or more likely a combination of them. And they need to be much more vocal in selling themselves to the highly skilled people they need to work for them and the government that they need to support them.
The government has signalled that it will be a more active player in this area. This is welcome news for business. It is not looking for government subsidies, for it to be protectionist or seek to create national champions. What it wants is a clear framework from government on where it sees the UK economy going, what are the major opportunities for this country and what it will do to help business realise them. The “New Industry, New Jobs” report launched in April was a good start in this respect and since then we have had a plethora of announcements, among others on Digital Britain, a Low Carbon Industrial Strategy and Advanced Manufacturing.
This evidence of a more active approach is welcome but what business needs now is more clarity on how the government will be taking things forward. To send clear signals to companies considering making long-term investments here, the government needs to spell out the criteria for making its own strategic investments. It also needs to be convinced that the government will work with it to clear away the obstacles to making and capitalising on these investments, be they skills, planning concerns, regulation or licensing issues or weaknesses in the supply chains. Business also needs to hear more about how government will use its vast procurement budget to stimulate innovation, particularly in growing markets. It has talked for some time about doing this but delivering on it will not be easy, particularly at a time when a recession, a looming spending squeeze and a pending election might encourage civil servants to baton down the hatches.
What our wellbeing says about the economy
- Peter Dixon is a guest columnist, the views expressed are his own. He is global financial economist at Commerzbank -
The popular image of economists is one of pointy-headed analysts, poring over data and running models in order to make predictions about the future which will invariably prove to be wrong.
While this is a distortion of the truth, the economics profession has not helped itself in recent years by cloaking analysis in pseudo-scientific terms, making it inaccessible to those without the necessary degree of mathematical training.
Although the great crash of 2007-08 has done nothing to enhance the reputation of economists’ ability to predict the future, it has opened up a debate about the nature of research undertaken in the economics and finance professions.
At heart economics is a social science –- the study of how people behave –- and finance is merely an extension of this. In recent years, the finance industry has paid greater attention to theories of behavioural finance whilst economics literature has gone back to its roots in an attempt to look more closely at the concept of utility. Common to both fields is the notion that an individual’s wellbeing is not necessarily best measured by standard pecuniary measures, and that we need to take greater account of other “psychological” factors.
This may suggest that the conventional way of assessing economic wellbeing by measuring income (or GDP) rather misses the point.
However, the literature on the economics of wellbeing does find a strong link between survey-based measures of happiness and macroeconomic aggregates, so all is not lost.
What is overlooked here is that a University does not just sell education, it also sells exclusivity. It does not matter if Harvard gives you the best education: if a few million per year can get a Harvard degree, then its value is diminished greatly.