The Swiss village of Davos, which hosts the annual summit. Photo: Getty
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The global elite in Davos must give the world a pay rise

Speaking for the 99 per cent at the World Economic Forum.

George Osborne may be feeling quite pleased with himself when he gets up to address the World Economic Forum in Davos this week. The self-styled poster boy of post-crash recovery will no doubt boast of Britain's return to growth and rising employment. But one uncomfortable fact that he and other politicians here are unlikely to mention is the continuing slide in the share of global wealth going on wages.

I’m in Davos too, as part of a small delegation of trade union leaders from around the world. We may be in a minority here among the heads of state and titans of finance, but we speak for the majority of the world – the 99 per cent. And just as the TUC has argued that Britain needs a pay rise, we are arguing in Davos that the world needs a pay rise too.

The share of national income going to wages across industrialized countries has fallen from over 66 per cent in the early Eighties to around 61 per cent, according to the OECD. Globally, the decline is even sharper – from 62.5 per cent in 1980 to 54 per cent in 2010, according to the United Nations. What’s more, the falling share is distributed increasingly unequally. Rising pay inequalities at the same time as a falling wage share mean even less of the rewards of growth go to the working people who create them.

The loss for most people’s wages means a greater share globally is going to those who are already the wealthiest. It means the super richer are getting stupendously richer and the rest of us are being left behind. And it means that politicians who keep telling us they want to ‘reward hard work’ have been speaking hollow words.

The World Economic Forum itself has at least finally put deepening income inequality at the top of its list of global concerns. It says that poverty, environmental degradation, persistent unemployment, political instability, violence and conflict are all related to deepening income inequality. But are the members of the global elite gathered in their exclusive mountain retreat ready to take the action needed to reverse this trend?

It means rejecting a broken economic system that has made them very rich, but brought the rest of the world an avalanche of social problems and restricted economic growth. The evidence that inequality within countries is bad for growth has been presented in recent reports from both the IMF and the OECD.

The world economy is wage led, and if the wages for the 99 per cent increase then their greater spending power boosts growth. Giving more and more to the top one per cent does not have the same impact – except perhaps on the luxury yacht market or future industries like private space flights.

The collapse of oil prices, and the resulting low inflation, will no doubt give the economy an immediate boost at a convenient time for George Osborne. But while an adrenaline shot can get a sick patient out of bed for a while, it’s no cure.

Cheap oil is a sign of a weakening global economy, reflected in the decision this week by the IMF to downgrade its growth forecasts for the UK and global economies. Global demand is growing weak, and there’s a very real risk that low inflation is the calm before the storm.

The lasting cure that Britain and the world need is a new global business model that works for us all. And at the heart of it must be a return to stronger wage growth. This would create a sustained increase in demand. It would help create the conditions in which new businesses can be created and prosper. And it would reverse the deepening inequality that is blighting so many lives.

This can only be achieved if workers have a stronger voice. Collective bargaining must be extended, and we need stronger employment rights to reverse the trend of casualisation. A solid and secure economy will never be built on the shaky foundations of zero-hours contracts, agency workers, job insecurity, and a global race to the bottom for pay and conditions.

Corporations need to start paying the taxes they owe in the countries where they make their vast profits – and governments need to make them. This will help ensure countries have the revenue needed to invest in long-term growth.

And a financial transactions tax – now backed by the Democrats in the USA as well as eleven EU member states – would crack down on financial speculation. That could help shift the focus of financial institutions back to long-term investment in high-skilled and well-paid job creation in real industries, instead of casino capitalism.

Frances O’Grady is TUC General Secretary

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An unmatched font of knowledge

Edinburgh’s global reputation as a knowledge economy is rooted in the performance and international outlook of its four universities.

As sociologist-turned US Senator Daniel Patrick Moynihan recognised when asked how to create a world-class city, a strong academic offering is pivotal to any forward-looking, ambitious city. “Build a university,” he said, “and wait 200 years.” He recognised the long-term return such an investment can deliver; how a renowned academic institution can help attract the world. However, in today’s increasingly globalised higher education sector, world-class universities no longer rely on the world coming to come to them – their outlook is increasingly international.

Boasting four world-class universities, Edinburgh not only attracts and retains students from around the world, but also increasingly exports its own distinctively Scottish brand of academic excellence. In fact, 53.9% of the city’s working age population is educated to degree level.

In the most recent QS World University Rankings, the University of Edinburgh was named as the 21st best university in the world, reflecting its reputation for research and teaching. It’s a fact reflected in the latest UK Research Exercise Framework (REF), conducted in 2014, which judged 96% of its academic departments to be producing world-leading research.

Innovation engine

Measured across the UK, annual Gross Value Added (GVA) by University of Edinburgh start-ups contributes more than £164m to the UK economy. In fact, of 262 companies to emerge from the university since the 1960s, 81% remain active today, employing more than 2,700 staff globally. That performance places the University of Edinburgh ahead of institutions such as MIT in terms of the number of start-ups it generates; an innovation hothouse that underlines why one in four graduates remain in Edinburgh and why blue chip brands such as Amazon, IBM and Microsoft all have R&D facilities in the city.

One such spin out making its mark is PureLiFi, founded by Professor Harald Haas to commercialise his groundbreaking research on data transmission using the visible light spectrum. With data transfer speeds 10,000 times faster than radio waves, LiFi not only enables bandwidths of 1 Gigabit/sec but is also far more secure.

Edinburgh’s universities play a pivotal role in the local economy. Through its core operations, knowledge transfer activities and world-class research the University generated £4.9bn in GVA and 44,500 jobs globally, when accounting for international alumni.

With £1.4bn earmarked for estate development over the next 10 years, the University of Edinburgh remains the city’s largest property developer. Its extensive programme of investment includes the soon-to-open Higgs Centre for Innovation. A partnership with the UK Astronomy Technology Centre, the new centre will open next year and will supply business incubation support for potential big data and space technology applications, enabling start-ups to realise the commercial potential of applied research in subjects such as particle physics.

It’s a story of innovation that is mirrored across Edinburgh’s academic landscape. Each university has carved its own areas of academic excellence and research expertise, such as the University of Edinburgh’s renowned School of Informatics, ranked among the world’s elite institutions for Computer Science. 

The future of energy

Research conducted into the economic impact of Heriot-Watt University demonstrated that it generates £278m in annual GVA for the Scottish economy and directly supports more than 6,000 jobs.

Set in 380-acres of picturesque parkland, Heriot-Watt University incorporates the Edinburgh Research Park, the first science park of its kind in the UK and now home to more than 40 companies.

Consistently ranked in the top 25% of UK universities, Heriot-Watt University enjoys an increasingly international reputation underpinned by a strong track record in research. 82% of the institution’s research is considered world-class (REF) – a fact reflected in a record breaking year for the university, attracting £40.6m in research funding in 2015. With an expanding campus in Dubai and last year’s opening of a £35m campus in Malaysia, Heriot-Watt is now among the UK’s top five universities in terms of international presence and numbers of international students.

"In 2015, Heriot-Watt University was ranked 34th overall in the QS ‘Top 50 under 50’ world rankings." 

Its established strengths in industry-related research will be further boosted with the imminent opening of the £20m Lyell Centre. It will become the Scottish headquarters of the British Geological Survey, and research will focus on global issues such as energy supply, environmental impact and climate change. As well as providing laboratory facilities, the new centre will feature a 50,000 litre climate change research aquarium, the UK Natural Environment Research Council Centre for Doctoral Training (CDT) in Oil and Gas, and the Shell Centre for Exploration Geoscience.

International appeal

An increasingly global outlook, supported by a bold international strategy, is helping to drive Edinburgh Napier University’s growth. The university now has more than 4,500 students studying its overseas programmes, through partnerships with institutions in Hong Kong, Singapore, China, Sri Lanka and India.

Edinburgh Napier has been present in Hong Kong for more than 20 years and its impact grows year-on-year. Already the UK’s largest higher education provider in the territory, more than 1,500 students graduated in 2015 alone.

In terms of world-leading research, Edinburgh Napier continues to make its mark, with the REF judging 54% of its research to be either world-class or internationally excellent in 2014. The assessment singled out particular strengths in Earth Systems and Environmental Sciences, where it was rated the top UK modern university for research impact. Taking into account research, knowledge exchange, as well as student and staff spending, Edinburgh Napier University generates in excess of £201.9m GVA and supports 2,897 jobs in the city economy.

On the south-east side of Edinburgh, Queen Margaret University is Scotland’s first university to have an on-campus Business Gateway, highlighting the emphasis placed on business creation and innovation.

QMU moved up 49 places overall in the 2014 REF, taking it to 80th place in The Times’ rankings for research excellence in the UK. The Framework scored 58% of Queen Margaret’s research as either world-leading or internationally excellent, especially in relation to Speech and Language Sciences, where the University is ranked 2nd in the UK.

In terms of its international appeal, one in five of Queen Margaret’s students now comes from outside the EU, and it is also expanding its overseas programme offer, which already sees courses delivered in Greece, India, Nepal, Saudi Arabia and Singapore.

With 820 years of collective academic excellence to export to the world, Edinburgh enjoys a truly privileged position in the evolving story of academic globalisation and the commercialisation of world-class research and innovation. If he were still around today, Senator Moynihan would no doubt agree – a world-class city indeed.

For further information www.investinedinburgh.com