An ‘Economic Freedom Bill’ in the Queen’s Speech could address these wider economic imbalances, writes Mike Morgan-Giles.
Today, the government announces its new agenda for the next 18 months or so in the Queen’s Speech. It comes at a time when their economic credibility is sliding and follows the loss of hundreds of seats to Labour at the local elections on May 3rd.
More importantly, though, millions of people across the country continue to struggle to make ends meet.
Salaries are being frozen and jobs are being lost, while in the background inflation is causing petrol, food, childcare and energy to get ever more expensive.
Ed Miliband recently announced five priority areas Labour would legislate on – tax, energy prices, transport costs, consumer rights and jobs for young people. These are all positive and important proposals, aimed at ushering in an era of fairer capitalism.
However, without addressing the imbalances in work places across the country, pay for those at the top will extend ever further away from those struggling on low wages. Without greater parity, social mobility will remain limited and educational standards will continue to underwhelm.
An ‘Economic Freedom Bill’ in the Queen’s Speech could address these wider economic imbalances, with five key areas to focus on:
1. Reducing the gender pay gap: Forcing everyone to publish their tax returns would ensure people doing the same job earn the same amount (men are more likely to earn more in these instances).
Furthermore, introducing shared maternity/paternity rights would allow women to transfer their leave over to their partner if desired.
2. Fair pay: The minimum wage should be pegged to inflation rates, as this accurately represents the additional costs which working people face each year.
Furthermore, the London Living Wage should become enshrined in law, rather than just being an option for rich multinational corporations. Firms that introduce pay ratios between the highest and lowest earners should be entitled to tax breaks and government contracts.
3. Income transparency: Income Tax and National Insurance should be merged to ensure greater understanding of personal tax rates. National Insurance is too frequently increased by politicians who at the same time make contrasting claims about taxes on wages.
4. Giving workers a bigger say: Since 1976, Germany has successfully had worker representation on company boards, known as co-determination. This now applies to medium and large firms – and works by them having two boards of directors.
Shareholders and trade unions elect members of the supervisory board, which then itself elects a management board. The supervisory board determines the company’s agenda, whilst the management board runs the day-to-day business. This has helped give workers a bigger say, while reducing the number of strikes.
5. Greater employee ownership: 2012 is the United Nations International Year of Cooperatives, which provides a great opportunity to push this agenda. By providing cooperatives and mutuals with tax breaks, advice, access to contracts and an initial investment, this can result in a major uptake in employees reaping the direct rewards of their labour.
Cooperatives and mutuals can also be used as vehicles to help reduce bills such as energy and childcare.
Without taking genuine steps to readdress the balance of parity in the workplace, our society will only become more unequal. This is significant because high inequality is directly linked to a wide range of societal problems – such as increased violence, worse health outcomes, less social mobility and poorer educational attainment. And this applies regardless of the wealth of the society in question. In short, economic parity benefits us all.
The recent Sunday Times Rich List showed the wealth of those at the top had recovered to the levels prior to the economic crisis which began in 2008. These five steps can result in a similar development for hard working people who haven’t been shielded from high inflation, cuts and pay freezes.