Transcript Inclusive Growth: How New Ambitions and New

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Inclusive Growth: How New
Ambitions and New Alliances Can
Rebuild the Opportunity Economy
Rt Hon Liam Byrne MP
June 2013
Context (1): clearing up the crash
High Debt-GDP ratios mean faster growth
essential
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Context (2): the price and prize of globalisation
Workers’
share of
earnings is
collapsing
In swathes of the west, the
majority of wealth goes to the
minority of people
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The challenge differs in different countries...
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And within countries...
Breakdown of wage squeeze in the UK
Young people
are bearing
the brunt of
the wage
squeeze
5
But the problem is getting worse everywhere...
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Productivity gains are no longer fairly shared
In the UK
productivity and
pay link broke
down in 90s
And living
standards are
likely to remain flat
for a long time
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So: what do we do?
Supply
Capital
Competition policy/ New
Market Entrants (aka
‘Enterprise’)
Labour
Demand
Regional policy
Fair Tax
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Demand side: we need a bigger market
“A potential TTIP is estimated to yield an
increase in UK national income of between
£4-10 billion annually, or up to
£100 billion over a ten-year period (which
corresponds to a 0.14-0.35 per cent
increase in GDP levels.)” Centre for Economic Policy
Research, March 2013 , page 6
EU-China: “Such a deal would deliver a
sizeable economic prize with initial
economic analysis suggesting it could be
worth up to £1.8
billion every
year to the UK economy alone”.
PM champions EU free trade deal with China, 2 December 2013
“a TPP agreement provides global income benefits of an estimated
$223
billion per year, by 2025. Real income benefits to the United States
are an estimated $77 billion per year. The TPP could generate an estimated $305
billion in additional world exports per year, by 2025, including an additional $123.5
billion in U.S. exports.” – Petersen Institute1]
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Supply side: we need better science and
innovation
1. Put science and innovation at the
heart if a strategy for long-term
economic growth;
2. Prioritise investment in excellent
people;
3. Strengthen Government’s use of
science;
4. Reinforce the UK’s position as a
hub for global science and
innovation;
5. Better align science and innovation
with global challenges;
6. Revitalise science and mathematics
education.
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Countries are rapidly increasing R&D spend
OECD: average annual growth in science spend 2008-11
Canada
-0.9%
United Kingdom
0.5%
Italy
0.6%
United States
1.2%
Russian Federation
1.3%
France
2.4%
European Union (28 countries)
3.6%
Japan
3.8%
Germany
6.3%
Chinese Taipei
10.7%
Korea
13.2%
China
16.3%
OECD average
-2.0%
0.0%
3.2%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
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Patient capital
"The idea that the
smartest, richest
elites of society find
this an acceptable
activity. This predatory
activity.“ M Lewis
Global AuM ($TRN)
101.7
100
80
“A crucial breakthrough would occur if the
major players in the market, particularly the
big asset owners, joined the fight—
something we believe is in the best
interests of their constituents”.
59.4
60
40
63.9
37.3
20
0
Focusing Capital on the Long Term
by Dominic Barton and Mark Wiseman
2004
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2007
2012
2020
(estimated)
Pro-work, pro-skill = productive workers
% of Under 25s going to University
80
72
70
60
50
40
49
37
40
France
Germany
52
54
United Kingdom
United States
30
20
10
0
Sweden
Australia
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Pro-work, pro-skill = productive workers
Key Reforms to Apprenticeships in OECD
Nation
Reform
Netherlands
•About half of graduates from highest VET track (MBO 4) continue into
professional bachelor's degree programmes
Germany
•Access to university for students without the normal HE access
qualification substantially enhanced in 2009.
Switzerland
•Specific vocational matriculation examination (the Berufsmaturität) to
provide access to tertiary education.
•Today, they represent half of the students in applied science
universities
Austria
•Lehre mit Matura introduced in 2008.
•Five year vocational colleges provide route into tertiary education
•One in four university students, and almost one in two university of
applied science students are now vocational college graduates.
Korea
•Around ¾ of vocational high schools graduates immediately enter
tertiary education
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Pro-work, pro-skill = higher pay
Pressure for higher minimum wages is growing globally
Country
Minimum wage reform
Switzerland
Vote on wage floor of £14.90/hour
Seattle
City-wide minimum wage of £9 (2X Fed Min
Wage)
Germany
Bundestag vote on £7 NMW next month
China
Minimum wage ordered up 40% of average
urban salaries by 2015.
UK.
Former PM advisor calls for £8 /hour (20% up) +
£10 in London (50% up)
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Pro-work, pro-skill = higher pay?
OECD Minimum Wage ($)
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22% rise in 13
years: but 0.8%
since 2009
7
6
5
4
3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
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Competition/ Enterprise
A tiny fraction of
firms...
Are creating a
huge proportion of
jobs
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‘Inclusive growth’ means no place left behind
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Fair taxes
Amazon UK paid £2.4m tax last year,
despite £4bn sales – BBC, 16/5/14
Starbucks pays UK corporation tax for
first time since 2009 – BBC, 24/6/13
‘Companies have to pay their share. Tax
is a moral issue’ – Rt Hon Margaret
Hodge MP, Chair Public Accounts
Committee
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Fair taxes
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Fair taxes
Question #1: Do you consider the amount of Federal
Income Tax you have to pay is too high, about right, or too
low?
Gallup 2014, quoted, http://globaleconomicanalysis.blogspot.com/2014/04/52-say-taxes-too-high-54-saytaxes-fair.html#u0OBf7JPy7Hs6oHG.99
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Where are the win-wins? And who are they
with?
1.
2.
3.
4.
5.
6.
7.
A bigger market-place + better infrastructure
Strong science and innovation policy
Patient capital to encourage long-termism
Good HE + better vocational education the key to unlock better pay
Fair competition and enterprise as basis for market regulation
Regional policy that supports local clusters
Fair taxes connected to business needs
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