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

Frances O'Grady is the General Secretary of the TUC. 

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The 8 bits of good news about integration buried in the Casey Review

It's not all Trojan Horses.

The government-commissioned Casey Review on integration tackles serious subjects, from honour crimes to discrimination and hate crime.

It outlines how deprivation, discrimination, segregated schools and unenlightened traditions can drag certain British-Pakistani and Bangladeshi communities into isolation. 

It shines a light on nepotistic local politics, which only entrench religious and gender segregation. It also charts the hurdles faced by ethnic minorities from school, to university and the workplace. There is no doubt it makes uncomfortable reading. 

But at a time when the negative consequences of immigration are dominating headlines, it’s easy to miss some of the more optimistic trends the Casey Report uncovered:

1. You can always have more friends

For all the talk of segregation, 82 per cent of us socialise at least once a month with people from a different ethnic and religious background, according to the Citizenship Survey 2010-11.

More than half of first generation migrants had friends of a different ethnicity. As for their children, nearly three quarters were friends with people from other ethnic backgrounds. Younger people with higher levels of education and better wages are most likely to have close inter-ethnic friendships. 

Brits from Black African and Mixed ethnic backgrounds are the most sociable it seems, as they are most likely to have friends from outside their neighbourhood. White British and Irish ethnic groups, on the other hand, are least likely to have ethnically-mixed social networks. 

Moving away from home seemed to be a key factor in diversifying your friendship group –18 to 34s were the most ethnically integrated age group. 

2. Integrated schools help

The Casey Review tells the story of how schools can distort a community’s view of the world, such as the mostly Asian high school where pupils thought 90 per cent of Brits were Asian (the actual figure is 7 per cent), and the Trojan Horse affair, where hardline Muslims were accused of dominating the curriculum of a state school (the exact facts have never come to light). 

But on the other hand, schools that are integrated, can change a whole community’s perspective. A study in Oldham found that when two schools were merged to create a more balanced pupil population between White Brits and British Asians, the level of anxiety both groups felt diminished. 

3. And kids are doing better at school

The Casey Report notes: “In recent years there has been a general improvement in educational attainment in schools, with a narrowing in the gap between White pupils and pupils from Pakistani, Bangladeshi and African/Caribbean/Black ethnic backgrounds.”

A number of ethnic minority groups, including pupils of Chinese, Indian, Irish and Bangladeshi ethnicity, outperformed White British pupils (but not White Gypsy and Roma pupils, who had the lowest attainment levels of all). 

4. Most people feel part of a community

Despite the talk of a divided society, in 2015-16, 89 per cent of people thought their community was cohesive, according to the Community Life Survey, and agreed their local area is a place where people from different backgrounds get on well together. This feeling of cohesiveness is actually higher than in 2003, at the height of New Labour multiculturalism, when the figure stood at 80 per cent. 

5. Muslims are sticklers for the law

Much of the Casey Report dealt with the divisions between British Muslims and other communities, on matters of culture, religious extremism and equality. It also looked at the Islamophobia and discrimination Muslims face in the UK. 

However, while the cultural and ideological clashes may be real, a ComRes/BBC poll in 2015 found that 95 per cent of British Muslims felt loyal to Britain and 93 per cent believed Muslims in Britain should always obey British laws. 

6. Employment prospects are improving

The Casey Review rightly notes the discrimination faced by jobseekers, such as study which found CVs with white-sounding names had a better rate of reply. Brits from Black, Pakistani or Bangladeshi backgrounds are more likely to be unemployed than Whites. 

However, the employment gap between ethnic minorities and White Brits has narrowed over the last decade, from 15.6 per cent in 2004 to 12.8 per cent in 2015. 

In October 2015, public and private sector employers responsible for employing 1.8m people signed a pledge to operate recruitment on a “name blind” basis. 

7. Pretty much everyone understand this

According to the 2011 census, 91.6 per cent of adults in England and Wales had English as their main language. And 98.2 per cent of them could speak English. 

Since 2008-2009, most non-European migrants coming to the UK have to meet English requirements as part of the immigration process. 

8. Oh, and there’s a British Muslim Mayor ready to tackle integration head on

The Casey Review criticised British Asian community leaders in northern towns for preventing proper discussion of equality and in some cases preventing women from launching rival bids for a council seat.

But it also quoted Sadiq Khan, the Mayor of London, and a British Muslim. Khan criticised religious families that force children to adopt a certain lifestyle, and he concluded:

"There is no other city in the world where I would want to raise my daughters than London.

"They have rights, they have protection, the right to wear what they like, think what they like, to meet who they like, to study what they like, more than they would in any other country.”

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.