“Same storm, different boats”: addressing covid-19 inequalities and the ‘long term challenge’

MS Queen Elizabeth in Stornoway

The coronavirus pandemic has impacted upon almost every aspect of life.  However, this impact has not been felt by everyone equally. Some groups of people have been particularly badly affected – both by the virus itself and by the negative social and economic consequences of social distancing measures.  The phrase ‘same storm, different boats’ has been used widely to emphasise this.

The pandemic has exposed and deepened many of the deep-rooted inequalities in our society, including gender, ethnicity and income.  It has also shone a light on more recent inequalities too, such as the growth of precarious employment among sections of the population.

As we move out of lockdown, the long term consequences of the pandemic will continue to be felt unevenly across different sections of society, with those on the lowest incomes being most vulnerable.

As thoughts turn to recovery, there is a growing sense that now is the time to consider how we can create a more equitable society that benefits those most in need.

 

The long-term challenge

During a recent Poverty Alliance webinar, ‘Build Back Better: Poverty, Health and Covid-19: emerging lessons from Scotland’, Dr Gerry McCartney, Head of the Public Health Observatory at Public Health Scotland noted that the coronavirus pandemic was causing three concurrent public health crises:

  • the direct impact of the virus (through ill health and/or death);
  • the indirect impacts on health and social care services (e.g. reduced hospital admissions/referrals, delayed diagnoses); and
  • the long term unintended consequences of physical distancing measures

Dr McCartney’s recent research sets out the different groups at particular risk from covid-19 and outlines a number of ways in which the unintended consequences of physical distancing measures may negatively impact upon health via a complex set of pathways – including reduced physical activity, fear, anxiety, stress, boredom and loneliness, economic stresses related to reduced income and unemployment, the impact of the loss of education, as well as the risk of abuse and exploitation of children not in school, substance abuse, and domestic abuse and violence.

Dr McCartney has also been involved in a project that sought to quantify the direct impact of the pandemic in terms of years of life lost.  The results showed that, over 10 years, the impact of inequality on life expectancy is actually at least six times greater than the direct impact of the pandemic itself.

Dr McCartney referred to this as the “long-term challenge” and argues that in order to address these inequalities, it is crucial that society aims to ‘build back better’ following the pandemic.

Build Back Better

But what does this mean?  Put simply, Build back better argues that pandemic offers an unprecedented opportunity to refocus society on the principles of equity and sustainability.

A recent paper by the Wellbeing Economy Alliance (WEAll) sets out 10 key principles for ‘building back better’, covering a range of environmental, social and governance issues:

It highlights international examples of each of these principles in action, for example, speeding up the adoption of the doughnut economics framework in Amsterdam in response to the pandemic, and through the wellbeing principles implemented by the Wellbeing Economy Governments (WEGo) group, consisting of Iceland, New Zealand and Scotland (and recently joined Wales).

Indeed, in Scotland, the independent Advisory Group on Economic Recovery, established by the Scottish Government, have recently published their findings on how to support Scotland’s economy to recover from the pandemic.  It states that “establishing a robust, wellbeing economy matters more than ever”.

Unequal employment impact

One of the guiding principles set out by the Advisory Group on Economic Recovery is to “tackle inequality by mitigating the risks of unemployment, especially among groups hit hard by the crisis”.

Indeed, unemployment following the pandemic is unlikely to affect everyone equally – women, young people, BAME individuals and the low-paid are predicted to suffer the brunt.

In a subsequent Poverty Alliance webinar, ‘Addressing unemployment after Covid-19’, Tony Wilson from the Institute for Employment Studies (IES) highlights the scale of the problem.  He states that unemployment is rising faster than at any point in our lifetimes (barring a blip in 1947), and is likely to increase by 3 million as a result of the pandemic.

Again, the impact of this will be uneven.  Anna Ritchie Allan, director of Close the Gap, discusses the impact upon women in particular.  As well as being more likely to work in a sector that has been shut down, women are also more likely to have lost their job, had their hours cut, or been furloughed. As women are also usually the primary carers of their children, they have disproportionately affected by the closure of schools and home learning.

A recent report by Close the Gap highlights how the impending post-covid downturn is different than previous recessions, as the restrictions imposed to tackle the virus have impacted most heavily upon sectors that employ large numbers of female (e.g. hospitality, retail, care), as well as services that enable women’s participation in the labour market (e.g. nurseries, schools, and social care). Young and Black and minority ethnic (BME) women have been particularly affected.

For example, Kathleen Henehan, Research and Policy Analyst at the Resolution Foundation, considers how young people’s employment prospects have been affected by the pandemic. She notes that young people leaving education are likely to be worst affected.  However, again, inequalities exist – with those with lower levels of qualifications being particularly affected, and women and BME individuals within those groups affected most of all.

According to Anna Allan, policy to address unemployment as a result of the pandemic needs to be both gender-sensitive and intersectional – taking account of the fact that women are not one homogenous group, and ensuring that any job creation is not just providing more ‘jobs for the boys’.  For example, recent research by the Women’s Budget Group shows that investing in care would create 7 times as many jobs as the same investment in construction: 6.3 as many for women and 10% more for men.

Building forwards

In a third webinar, ‘Disability, rights and covid-19: learning for the future’, Dr Sally Witcher, CEO of Inclusion Scotland, suggests that as well as exposing and deepening existing inequalities, the coronavirus pandemic has created the scope for new inequalities to be created – ‘faultlines’ created by the differing impacts of the virus.

Dr Witcher questions the term ‘build back better’ – she asks whether indeed we should want to build back, when the old normal didn’t work for a large proportion of people, particularly those with disabilities. Dr Witcher also questions ‘who’ is doing the building, and whether the people designing this new future will have the knowledge and lived experience of what really needs to change.

Dr Witcher suggests that for any attempt to ‘build back better’ to be meaningful, it needs to reach out to the people that don’t currently have a voice – the people who have been most heavily affected by the virus.  Not only do these groups need to be involved, but they need to be leading the discussion about what a post-covid future looks like.

A post-covid future

Whilst the coronavirus pandemic has had a massive, devastating impact on people and economies around the world, it has created an opportunity to reflect on what is important to us as individuals and as a society.

There is strong public demand for change. According to a new YouGov poll, only 6% of the public want to return to the same type of economy as before the coronavirus pandemic.

Building back better recognises that addressing the causes of the deep-rooted and long-standing inequalities in our society is critical to a successful post-covid recovery.

There is also a need to protect and enhance public services, address issues of low-pay and insecure work, and prioritise wellbeing and the environment through a ‘green recovery’.

As Tressa Burke, of the Glasgow Disability Alliance, states:

History will recount how we all responded to the coronavirus outbreak.  We need to ensure that the story told demonstrates our commitment, as a society, to protecting everyone from harm, particularly those most at risk of the worst impacts of covid.”


For further discussion of the wellbeing economy, you may be interested in our blog post ‘How well is your economy? Moving beyond GDP as an indicator of success

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Knowledge from a distance: recent webinars on public and social policy

During the national lockdown, it’s been impossible for most of us to attend conferences and seminars. But many organisations have been harnessing the power of technology to help people share their knowledge, ideas and experience in virtual seminars.

In the past few weeks, the research officers at The Knowledge Exchange have joined some of these webinars, and in today’s blog post we’d like to share with you some of the public and social policy issues that have been highlighted in these online events.

The liveable city

Organised by the Danish Embassy in the UK, this webinar brought together a range of speakers from Denmark and the UK to consider how our cities may change post COVID-19, including questions around green space, high street recovery, active travel and density and types of residential living accommodation in our towns and cities.

Speakers came from two London boroughs, architectural design and urban planning backgrounds and gave examples of experiences in Newham, Ealing and Copenhagen as well as other more general examples from across the UK and Denmark. The seminar’s website also includes links to presentations on previous Liveable City events in Manchester, Edinburgh, Bristol and Glasgow.


What next for public health?

“Healthcare just had its 2008 banking crisis… COVID-19 has generated a real seismic shift within the sector and I don’t think we will ever go back”

This webinar brought together commentators and thought leaders from across the digital health and tech sectors to think about how public health may be transformed by our experiences of the COVID-19 pandemic and the significant shift to digital and online platforms to deliver care.

The speakers discussed data, privacy and trust and the need to recognise different levels of engagement with digital platforms to ensure that specific groups like older people don’t feel unable to access services. They also discussed the importance of not being driven by data, but using data to help us to make better decisions. The webinar was organised by BIMA, a community of businesses, charities and academia across the UK.


Green cities

This project, organised by the Town and Country Planning Association (TCPA), included 3 webinars each looking at different elements of green infrastructure within cities, including designing and planning, assessing the quality of different types of green infrastructure and highlighting the positive impacts of incorporating more good quality green spaces for mental and physical health, as well as for environmental purposes.


Rough sleeping and homelessness during and after the coronavirus

Organised by the Centre for London, this webinar brought together speakers from across the homelessness sector within London, including St Mungos, the Greater London Authority (GLA) and Croydon Council to explore how the COVID-19 pandemic was impacting people who are homeless or sleeping rough in the city.

Each speaker brought insights from their own experiences supporting homeless people in the capital (so far) during the COVID 19-pandemic. They highlighted some of the challenges, as well as some of the more positive steps forward, particularly in relation to co-operation and partnership working across different levels of government and with other sectors such as health.

They also commended everyone involved for the speed at which they acted to support homeless people, particularly those who were vulnerable or at risk. However, concerns were also raised around future planning and the importance of not regressing back into old ways of working once the pandemic response tails off.


Poverty, health and Covid-19: emerging lessons in Scotland

This webinar was hosted by the Poverty Alliance as part of a wider series that they are hosting.  It looked at how to ‘build back better’ following the pandemic, with a particular focus upon addressing the long-standing inequalities that exist throughout society.

The event included presentations from Dr Gerry McCartney, Head of the Public Health Observatory at Public Health Scotland, Dr Anne Mullin, Chair of the Deep End GPs, and Professor Linda Bauld, Professor of Public Health at University of Edinburgh.

A key message throughout was that while the immediate health impacts of the pandemic have been huge, there is an urgent need to acknowledge and address the “long-term challenge” – the impact on health caused by the economic and social inequalities associated with the pandemic.

It is estimated that over 10 years, the impact of inequalities will be six times greater than that of an unmitigated pandemic. Therefore, ‘building back better’ is essential in order to ensure long-term population health.


Returning to work: addressing unemployment after Covid-19

This webinar was also hosted by the Poverty Alliance as part of their wider webinar series on the pandemic.

The focus here was how to address the inevitable rise in unemployment following the pandemic – the anticipated increase in jobless numbers is currently estimated to be over three million.

The event included presentations from Kathleen Henehan, Research and Policy Analyst at Resolution Foundation, Anna Ritchie Allan, Executive Director at Close the Gap, and Tony Wilson, Director of the Institute for Employment Studies.

The webinar highlighted the unprecedented scale of the problem – noting that more than half of the working population are currently not working due to the pandemic, being either unemployed, furloughed or in receipt of self-employment support.

A key theme of the presentation was that certain groups are likely to be disproportionately affected by unemployment as the support provided by the government’s support schemes draw to a close later this year.  This includes women – particularly those from BAME groups, the lower paid and migrants – and young people.  So it’s essential that the support provided by the government in the form of skills, training, job creation schemes etc addresses this, and is both gender-sensitive and intersectional.


Supporting the return to educational settings of autistic children and young people

The aim of this webinar, provided by the National Autism Implementation Team (NAIT), was to offer a useful overview of how to support autistic children and young people, and those with additional support needs, back into educational settings following the pandemic.

Currently around 25% of learners in mainstream schools have additional support needs, and it is generally accepted that good autism practice is beneficial for all children.

The webinar set out eight key messages for supporting a successful return, which included making anticipatory adjustments rather than ‘waiting and seeing’, using visual supports, providing predictability, planning for movement breaks and provision of a ‘safe space’ for each child.  The importance of listening to parents was also emphasised.


P1050381.JPG

Ellisland Farm, Dumfries. “P1050381.JPG” by ejbluefolds is licensed under CC BY-NC 2.0

Burns at Ellisland

Our Research Officer, Donna Gardiner has also been following some cultural webinars, including one that focused on the links between Scotland’s national poet and the Ellisland Farm site. The webinar was led by Professor Gerard Carruthers, Francis Hutcheson Chair of Scottish Literature at the University of Glasgow and co-director of the Centre for Robert Burns Studies.

Robert Burns lived at Ellisland Farm in Dumfriesshire between May 1788 and November 1791, and is where he produced a significant proportion of his work – 23% of his letters and 28% of his songs and poems, including the famous Tam O’Shanter and Auld Lang Syne.

The presentation looked at how Robert Burns was influenced by the farm itself and its location on the banks of the River Nith.  It also touched on his involvement with local politics and friends in the area, which too influenced his work.

It was suggested that the Ellisland farm site could be considered in many ways to be the birthplace of wider European Romanticism. The webinar also included contributions from Joan McAlpine MSP, who is chair of the newly formed Robert Burns Ellisland Trust. She discussed how to help promote and conserve this historic site, particularly given the impact of the coronavirus on tourism.


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The economic impacts of the coronavirus outbreak: what the experts are saying

While the coronavirus outbreak is first and foremost a public health emergency, the economic damage caused by the pandemic is also a huge concern. In recent weeks, think tanks and economists have been offering their thoughts on just how badly they believe the economy will be affected by Covid-19, and how long it might take to recover.

With each passing week it’s emerging that the economic impact of the coronavirus could be more severe than first thought. The International Monetary Fund (IMF) has warned that the shutdown of economic activity in the world’s major economies is likely to trigger a far more painful recession than the one following the financial crisis of 2008. The IMF now believes that the world is facing the worst economic downturn since the Great Depression of the 1930s.

In the UK, an equally gloomy prognosis has come from the Office for Budget Responsibility (OBR), the government’s fiscal watchdog. Its stark assessment of the possible economic impact of Covid-19 indicates that the UK economy could shrink by 35% and unemployment could rise to more than two million.

The regional picture

The economic impact of coronavirus is varying significantly across the country. Research by the Centre for Progressive Policy (CPP) has revealed that the decline in economic output is estimated to reach almost 50% in parts of the Midlands and the North West in the second quarter of this year. In terms of decline in Gross Value Added (GVA), Pendle in the North West is estimated to be the hardest hit local authority in the UK, followed closely by South Derbyshire and Corby in the East Midlands.

In Scotland, since the coronavirus outbreak began, the University of Strathclyde’s Fraser of Allander Institute (FAI) has been publishing regular updates about how business is being affected.

The FAI’s most recent survey of Scottish businesses  finds that, while all sectors of the Scottish economy have been severely affected by the crisis in terms of staffing levels, the accommodation and food services sector (which includes hotels, bars and restaurants) has experienced the harshest impacts, with 77% of businesses reducing staff numbers. In addition, 85% of businesses expect growth in the Scottish economy to be weak or very weak over the next 12 months.

On a more positive note, the FAI survey found that more than 95% of businesses which are planning to use the UK government’s  Coronavirus Job Retention Scheme believe it will be ‘very effective/effective’ in supporting their survival during the pandemic.

Business and employment support

The Job Retention Scheme is one of a series of measures introduced by the UK government aiming to limit the impact of the coronavirus, and ensure much of the economy is able to recover when the health crisis is over. While these actions have been widely welcomed, there have been calls for the UK to learn from more innovative measures adopted by other governments.

A report by the Policy Exchange think tank has highlighted Denmark’s wage subsidy, which is differently calibrated to the Job Retention scheme in the UK. While the Danish government is covering 75% of the salaries of employees paid on a monthly basis who would otherwise have been fired, for hourly workers the government will cover 90% of their wages, up to £3,162 per month. The Policy Exchange report notes that this assumes that workers paid by the hour won’t have the savings and support networks that generally better off salaried workers are likely to have.

Household challenges

The bigger economic picture is bad enough. But the real pain of an economic recession will be felt much closer to home. For individual households, social distancing measures aiming to contain the spread of coronavirus are already having significant impacts on spending habits. Research by the Institute of Fiscal Studies (IFS) has highlighted how these changes may be affecting people on different incomes.

The IFS suggests that richer households will be more resilient to falls in income since a considerable proportion of their spending goes on things that are currently not possible, such as eating out and holidays. But because lower-income households spend a higher share of their income on necessities, such as rent and food, the IFS suggests that they will be less resilient to any fall in income.

Exiting lockdown

In recent days, governments in France and Germany have set out plans for easing their lockdown restrictions, while Austria and Italy have already allowed some shops to open.  But the UK government has extended its lockdown to the beginning of May, and has not announced a clear exit strategy.

The uncertainty surrounding the trajectory of the coronavirus makes it exceptionally difficult to see when things might return to normal. But some analysts are becoming concerned about the harm that a prolonged lockdown might do.  A discussion paper published at the beginning of April highlighted some of these dangers:

“A long lockdown will wipe out large swathes of the economy. There will be a negative impact both financially and mentally on too many people. Already the lockdown has seen a surge in domestic violence. How to end the lockdown is key to helping restart the economy.”

The authors of the paper have put forward a strategy for ending the lockdown, suggesting that a phased traffic light approach (red, amber, green) would give everyone a clear sense of direction and address the economic, social and quality of life challenges posed by the lockdown.

After the virus

There is no clear agreement among economists on how the economy might fare once the health emergency has passed. Some economists forecast a sharp recovery, others suggest it will take two or more quarters, while still others forecast an initial boost in activity followed by another dip when the effects of unemployment and corporate bankruptcies start to filter through.

But there is a growing sense that the pandemic will have a fundamental impact on the economic and financial order. And in the UK, Paul Johnson, director of the IFS,  has suggested there will be an economic reckoning:

 “We will need a complete reappraisal of economic policy once the current economic dislocation is behind us. Tough decisions will have to be made which are likely to involve tax rises and higher debt for some time to come. The only other alternative would be another period of austerity on the spending side. That looks unlikely.”


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Guest post: Economic effects of coronavirus lockdowns are staggering – but health recovery must be prioritised

By Pushan Dutt, INSEAD

In all my years as an economist, I have never seen a graph like the one below. It shows unemployment claims in the US – observe the spike for the week ending March 21. The global financial crisis, the dot-com crash, Black Monday, oil price shocks, 9/11, none of these historic shocks are even visible in the graph.

Figures: US Department of Labor

 

The spike in unemployment claims is the proverbial canary in the goldmine. We should expect a swathe of bad economic numbers coming down the pipeline. The head of the St. Louis Fed expects a 30% unemployment rate and a 50% drop in US GDP by summer. More importantly, as the health crisis rises and crests at different times in different parts of the world, the horrifying numbers on GDP growth, unemployment, business closures are not likely to let up in the near term. Multiple countries are in a recession, and eventually, the whole world will fall into a deep recession.

The plunge from prosperity to peril will be as swift as the switch to lockdown protocols in most countries. We cannot even rely on the data we have to reveal the speed and depth of the crisis since this is collected and updated with lags. For instance, the US monthly jobs report for March collects data in the second week of March, failing to capture the massive spike in unemployment claims that appears after March 12.

In the meantime, sources such as restaurant booking website OpenTable can offer some insights into the magnitude of things. The figures below show the recent plummet in diners eating at restaurants in four countries. Observe a sudden stop in the entire restaurant industry by the third week of March.


Annual % change in restaurant diners from end of February to end of March.

Data: OpenTable

 

Combine a black swan event with missing data, and it is not surprising that markets are swinging violently.

Deep freeze

The question is not one of whether we are in a recession – we are. The more pertinent questions are: how long it will last? How deep it will be? Who will be impacted the most? And how swift will the recovery be?

These questions are complicated and even top economists must admit a lack of confidence in their answers. We are not experiencing a standard downturn. Nor is it simply a financial crisis, a currency crisis, a debt crisis, a balance of payment crisis or a supply shock.

We have not seen anything like this since the flu pandemic of 1918. Even there, identifying the effects of the flu is confounded by the first world war that took place at the same time. What we have here is something different. At its heart, we are experiencing a healthcare crisis with various parts of the world succumbing in a staggered fashion.

To slow down this global health crisis (the “flatten the curve” mantra), we have chosen to put the economy into deep freeze temporarily. Production, spending, and incomes will inevitably decline. Decisions to reduce the severity of the epidemic exacerbate the size of the contraction. While the initial decision to reduce labour supply and consumption are voluntary, this will likely be followed by involuntary reductions in both, as businesses are forced to lay off workers or go bankrupt.

Of course, government policies will attempt to mitigate these effects. Some are using traditional monetary and fiscal policies (cutting interest rates, quantitative easing, increasing unemployment insurance, bailouts). Others are trying out non-traditional methods (direct cash transfers, loans to businesses conditional on maintaining unemployment, wage subsidies).

Public health priority

How long the economic impact lasts depends entirely on how long the pandemic lasts. This, in turn, depends on epidemiological variables and health policy choices. But even when the pandemic ends, the resumption of normalcy is likely to be gradual. Countries will persist with a strict containment regime like in China today, and continue to impose travel restrictions to various parts of the world where the disease continues to spread.

The many factors at play in this complex, interlinked crisis that affects both people’s health and the global economy introduces massive uncertainty into anyone hazarding the pace, the depth and the length of the impact. As a result, we should treat any precise estimates (such as “GDP will decline by X%” or “markets have reached their bottom”) with scepticism.

Especially frustrating is the idea that there is a conflict between academic disease modellers and hard-edged economists saying that steps to slow the spread of coronavirus has trade offs. This could not be further from the truth. Among economists there is near unanimity that countries should focus on the healthcare crisis and that tolerating a sharp slowdown in economic activity to arrest the spread of infections is the preferred policy path. In a recent survey carried out by the University of Chicago, respondents universally agreed that you cannot have a healthy economy without healthy people.

The health crisis has naturally created a crisis of confidence. This, in turn, can have damaging long-term effects with continuing uncertainty leading firms and households to postpone investment, production and spending. Restoring confidence requires a singular focus on containing and reversing the spread of COVID-19.

Slowing the rate that people fall ill with COVID-19 is not the end in itself. It is a means to temporarily reduce the pressure on hospitals and give time to identify treatments and a vaccine. In the interim, we must build testing capacity, perform contact tracing, setup the infrastructure for extended quarantines, rapidly expand the production of masks, ventilators and other protection equipment, build and repurpose facilities into hospitals, add intensive care capacity and train, recall and redeploy medical personnel.

All of this is also the way to restore the economy’s health and economic policy must complement it. In the short run, economic policies should mitigate the impact of lockdowns and ensure that the current crisis does not trigger financial, debt or currency crises. It should focus on flattening the recession curve, ensure that the temporary shutdown has only transient effects, and facilitate a quick recovery once the economy is taken out of the deep freeze.

In the meantime, it’s important to also recognise that this is an unprecedented crisis. Everybody has their role to play, but nobody is infallible and uncertainty is inevitable.

Pushan Dutt, Professor of Economics, INSEAD

This article is republished from The Conversation under a Creative Commons license. Read the original article.


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Universal basic income: too good to be true?

“I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Martin Luther King, 1967

It may come as a surprise to learn that the current ‘hot topic’ of universal basic income (UBI) – also known as basic income or income guarantee – is actually over 500 years old.

It was first developed by radicals such as philosopher Sir Thomas More in the 16th century, drawing upon humanist philosophy.  It was mooted by Thomas Paine in the 18th century, and then again in the mid-20th century, by economists such as James Tobin and Milton Friedman.  In 1967, Martin Luther King called for a ‘guaranteed income’ to abolish poverty, and in the 1970s, a basic income experiment ‘Mincome’ was conducted in Canada.

However, only in recent years has debate on universal basic income (UBI) moved into the mainstream.

From the threat of job losses from automation and artificial intelligence, an overly complex and bureaucratic welfare system that has been branded ‘unfit for purpose’, to the failure of conventional means to successfully tackle unemployment over the last decade – basic income has been hailed as a key way to reduce inequality and provide a basic level of financial security upon which individuals can build their lives.

It has many current supporters – including billionaires Elon Musk, Mark Zuckerberg, and Richard Branson.  There is support among the general public too, with a recent poll reporting that nearly half of all adults aged 18-75 in the UK (49%) would support the UK Government introducing UBI at the level to cover basic needs in principle.

 

How does it work? 

In essence, UBI offers every citizen a regular payment without means testing or requirement for work.

Trials of different models of basic income have been conducted around the globe, including Kenya, Finland, and Canada.  There are also UBI trials planned in the district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki.  Closer to home, four areas in Scotland are also currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire.

While there have been many different models of basic income trialled and assessed over the years, in general, basic income schemes share five key characteristics:

  • Periodic: it is paid at regular intervals, not as a one-off grant.
  • Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not paid in kind (such as food or services) or in vouchers with a specific use
  • Individual: it is paid on an individual basis—and not, for instance, to households.
  • Universal: it is paid to all, without means test
  • Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work

 

Anticipated benefits

The key anticipated benefits of the introduction of UBI is a reduction in inequality and poverty. However, advocates claim that it would also have many other benefits.  These include:

  • simplifying the existing welfare system (including efficiency gains)
  • reducing the psychological burden and stigma associated with welfare benefits
  • achieving more comprehensive coverage – no one ‘slipping through the net’
  • fixing the threshold and ‘poverty trap’ effects induced by means-tested schemes
  • enabling individuals to continue education and training, or retrain, without financial constraint dictating choices
  • making childcare arrangements easier
  • rewarding unpaid contributions such as caring and volunteer work
  • improving gender equality and help women in abusive situations
  • improving working conditions
  • addressing predicted future mass unemployment as a result of automation

 

Criticism

The key argument against the introduction of UBI is its cost – essentially that “an affordable UBI would be inadequate, and an adequate UBI would be unaffordable”.

Critics argue that if UBI were set at a level that enabled a modest, but decent standard of living on its own, then it would be unaffordable – either requiring much higher taxes, and/or the redistribution of funds from other areas, such as education or health.

However, if UBI was set too low, it would not provide an adequate income to live on, and it may be exploited as a subsidy for low wages by unscrupulous employers.

Others, such as economist John Kay, have argued that UBI simply would not have the redistributive effects intended.  Rather than improving the lives of those most in need, who would receive more or less the same as they do under existing welfare systems, it would instead provide more for the middle classes.

There is also some concern that UBI may undermine the incentive to work, and lead to the large-scale withdrawal of women from the labour market.

 

What does the evidence say?

Certainly, there is a beauty in the simplicity of UBI – and no one can argue against the goals of reducing inequality and poverty.  However, in truth, there just isn’t enough evidence available yet to judge whether or not the full-scale introduction of UBI would be successful.

While many pilots have demonstrated positive results, most have been of limited size and scope, and it is difficult to extrapolate these findings to the wider population.

Analyses by a wide range of organisations – including the RSA, the Joseph Rowntree Foundation, the OECD, and the International Monetary Fund, have drawn mixed results.

For example, a review conducted by Bath University in 2017 concluded that:

The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.”

Similarly, the IMF conclude that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, there are some aspects of UBI that are difficult to model, such as the behavioural impacts of having economic security.  Trials and experimentation are important sources of such information.

Thus, the planned trials of UBI in Scotland and elsewhere may well help to provide further answers.  And we – along with others around the world – will be watching with interest.

As First Minister, Nicola Sturgeon aptly puts it:

It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”


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Opportunity or necessity… what’s fuelling the growth in self-employment?

iStock_650068Small_BusinessManInMeadow

With unemployment reaching its lowest level since 1975, it may seem like the state of the labour market has improved in recent years. However, a closer look at the statistics suggests that this is not necessarily the case.

The strong performance in the labour market in part reflects the growth in self-employment, which has been a distinguishing feature of the labour market’s recovery since the last recession.

Growth in self-employment

There were almost 750,000 more self-employed in the UK workforce at the end of 2014 than at the start of the global financial crisis in 2008, representing a high proportion of the total net growth in jobs over this period. Self-employment accounts for over 15% of those in work in the UK – 4.8 million of a workforce of around 32 million. Between March 2008 and March 2017, self-employment accounted for almost a third of total employment growth.

The significance of the contribution of self-employment is highlighted in a recent article published in Regional Studies, which notes that of the 920,000 net new jobs created between quarter 1 of 2008 and quarter 2 of 2014, 693,000 were in self-employment.

There has also been a rise in the share of female self-employed and those that work part-time, in addition to growth in a broader range of industries and occupations among the self-employed.

Recent ONS figures also show that the growth in self-employment between 2001 and 2016 has been driven mainly by those who have a degree (or equivalent), leading to the share of the self-employed with a degree or equivalent increasing from 19.3% in 2001 to 32.6% in 2016 as a share of total self-employed. As a share of total employment (self-employed and employed), the figures show that relatively highly-qualified individuals are becoming more concentrated in the self-employed.

Earnings growth?

The reasons for this growth has been the subject of much debate, particularly as research suggests many fail to earn a decent living. This recent analysis by the New Economics Foundation found that 54% of all self-employed people are not earning a decent living. It also found that the percentage of the labour force in ‘good jobs’ had decreased from 63% in 2011 to 61% in 2016, suggesting that the quality of jobs is perhaps declining.

Similarly, the ONS figures suggest that the self-employment labour market remains financially insecure for its workers. They show that the distribution of self-employed income appears centred around £240 a week, much lower than that for employees, which is centred around £400 a week.

And, according to a recent report from CIPD, their real incomes have fallen more since 2008 than those of employees.

Perhaps, then, the self-employment growth has been driven by necessity rather than choice due to a lack of opportunity in the full-time labour market.

However, the evidence suggests it is not this simple.

Despite the widening gap in earnings between the self-employed and employed, the self-employed continue to have higher levels of job satisfaction than employees. The ONS figures also indicate that self-employed workers were more likely to supplement their income from elsewhere.

This would suggest that choice probably plays a large part in self-employment.

‘Push’ or ‘pull’ effect

There has been much discussion over whether the growth in self-employment is predominantly a result of choice or necessity.

It is often seen as a sign of labour market weakness, with self-employment perceived as a ‘last resort’ where a regular job can’t be found. The evidence suggests that this motivation accounts for just a small proportion of the change, however, with most of the rise in self-employment appearing to be out of choice rather than necessity.

Indeed, the recent analysis in the Regional Studies article, which examined the extent to which self-employment was associated with local ‘push’ or ‘pull’ effects, found little or no suggestion of any net ‘recession-push’ effect on self-employment. It suggests that:

  • ‘pull’ factors are more significant in driving transitions into self-employment;
  • self-employed business ownership appears not to function as a significant alternative to unemployment where paid employment demand is weak; and
  • entrepreneurial activity prospers where local wages are higher and unemployment lower.

The uncertainty surrounding Brexit could also be having an effect as declining employer confidence has contributed to a growing number of short-term contracts – potentially making self-employment appear the better choice.

Final thoughts

As the CIPD report highlights, there are probably more opportunities for self-employment now than there were a decade ago. And the self-employed are more likely to value highly aspects of the work, such as its variety, and choice over their working hours and pay.

Across the range of job-related characteristics, it is shown that the self-employed are as satisfied or more satisfied with their working life than employees, resulting in higher levels of overall job satisfaction – a finding that is consistent both over time and from different data sources.

In a time where work-life balance is of increasing importance, it is perhaps no surprise that self-employment is the path of choice.


If you enjoyed reading this, you may also be interested in our previous blogs on the gig economy, ‘the self-employment boom’ and ‘olderpreneurs‘.

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Is the record high employment rate masking the reality of in-work poverty?

wage-packetBy Heather Cameron

The employment rate may have hit a record high of 74.6%, with unemployment continuing to run at an 11-year low, but in-work poverty has also reached unprecedented levels.

More than half (55%) of people in poverty are living in working households, including millions of children, according to the latest Monitoring poverty and social exclusion (MPSE) report.

And new research for the Joseph Rowntree Foundation (JRF) published last week says four million more people are living below an adequate standard of living and ‘just managing’ at best.

Statistics

The findings of MPSE paint a bleak picture for a substantial share of the UK population. It notes that the proportion of the UK population living in poverty has barely changed since 2002/03, remaining at around 21%. And at 55%, those in poverty in working households has reached its highest level since the data set began in 1994/95.

Of this 55%, four fifths of the adults in these families are themselves working – a total of 3.8 million workers were living in poverty in 2014/15, an increase of around a million since 2004/05.

Female employees make up the single largest group within this group at 1.5 million, followed by male employees at 1.4 million. However, the majority of workers in in-work poverty are male (53%) as there were 620,000 male self-employed workers in poverty in 2014/15, while there were 250,000 female self-employed workers.

The story is different for workless households, however, as the proportion of people in poverty in these households has decreased, with the number in workless or retired families having fallen by half a million. Despite the significant increase in the number of people aged 65 and over, the figures show there are 400,000 fewer pensioners in poverty. There have also been reductions in the number of children in workless households.

While this is clearly encouraging, as the MPSE report suggests, it is difficult to categorise this as progress since there has been little change in the relative poverty measure overall.

Moreover, the new research from JRF warns that millions of just managing families are on the tipping point of falling into poverty as 30% of the population are living below the minimum income standard (MIS). In addition, 11 million people were found to be living far short of MIS, up from 9.1 million, who have incomes below 75% of the standard.

So what is causing these worrying statistics?

Contributory factors

The labour market has undoubtedly had some influence on these figures, with low wages and insecurity. Although average incomes have begun to rise, they are still below their peak. Male weekly earnings are still lower than 2005 levels and female weekly earnings, although now equal to 2005 levels, are still below what they were in 2010.  And with inflation expected to return, it has been suggested that hourly pay is unlikely to reach its pre-recession peak before 2020.

However, this is only part of the issue. There are also a number of other contributory factors, including:

  • increasing cost of living;
  • housing market failures; and
  • cuts in welfare benefits.

The increase in numbers living below an adequate standard of living has been driven by rising living costs while incomes stagnate. The price of a minimum ‘basket of goods’ has risen 27-30% since 2008, and average earnings by only half of this. The JRF analysis suggests the cost of living could be 10% higher by 2020, a period when much state support has been frozen.

Housing is also an important factor. It is often too expensive and of poor quality, particularly in the private rented sector. The MPSE findings show that the number of private renters in poverty has doubled over the last decade, with rent accounting for at least a third of income for more than 70% of private renters in poverty.

Households accepted as homeless and those in temporary accommodation have also increased and landlord evictions are close to a ten-year high.

Added to this, is the four-year freeze on benefits, tax credits and Universal Credit (UC), along with a reduction in the overall benefit cap. The benefit cap mainly affects households with children and will increase the number of families affected, from 20,000 to 112,000.

All this puts those on the lowest incomes at risk.

Way forward

Clearly, strong growth in the number of people in employment does not mean an end to employment-related disadvantage.

To help end poverty, the JRF has called on the government to make a number of changes, including:

  • reversing cuts to the amount people can earn before their benefits are reduced;
  • ending the freeze on working age benefits;
  • extending support to low wage sectors to reduce the productivity gap; and
  • investing in a living rents scheme to provide more affordable housing.

As the MPSE report concludes, “solutions for in-work poverty require more than just more work.”


If you enjoyed reading this, you may also like our previous articles on poverty.

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‘Think globally, act locally’ – local job creation

Jobssign2

By Heather Cameron

The Local Government Association (LGA) last week called for greater devolution of employment and skills funding to councils and a ‘radical rethink’ of the way Jobcentre Plus works. Chairman of the LGA’s People and Places Board said:

“Job centres need to engage with more unemployed people for a start and then help more claimants move into sustainable employment. This is crucial to boosting local growth. Councils know best how to do this. We know our local economies, we know our local employers and we know our residents and we can bring local services together in a way central government will never be able to.”

Local solutions

Of course, local solutions for job creation and economic growth is not a new idea. Local development and job creation initiatives first emerged in the 1980s, in response to a ‘new phenomenon of high, persistent and concentrated unemployment that national policies seemed powerless to reverse on their own. Since then they have continued to spread and develop.

Although unemployment is at an 11-year low in the UK, according to recent research many countries, including the UK, are seeing widening gaps in the geographic distribution of skills and jobs. And the importance of local solutions has again been highlighted.

The OECD’s most recent edition of Job Creation and Local Economic Development argues that local development is a key tool for addressing the problem of such unequal distribution. Similarly, in its submission to last year’s Autumn Statement, the LGA argued that local government is central to the delivery of locally tailored solutions to national public policy challenges.

Boosting productivity growth, while ensuring growth delivers improved living standards and distributes the benefits of increased prosperity equally, are highlighted by the OECD as the twin challenges facing all policymakers. Underlined as a crucial but difficult task, it is argued that ‘actions originating at any single governance level or policy area will not be sufficient’.

Whole-of-government approach

The OECD report, therefore, examines how national and local actors can better work together to support economic development and job creation at the local level. In particular, it outlines what both national and local actors can do to improve the local implementation of vocational education and training (VET) and SME and entrepreneurship policies.

Among the recommendations for national actors include:

  • Design VET frameworks that allow local stakeholders to tailor training to local labour market needs while still maintaining a certain level of national consistency
  • Build the capacities needed to make VET systems more agile locally
  • Develop a strong national apprenticeship framework that builds a high quality system, includes strategically-designed incentives for employer participation, and allows for flexible delivery frameworks
  • Maximise the efficiency of SME and entrepreneurship policy delivery by allowing for local tailoring, co-locating services, using intermediary organisations to deliver programmes, and/or developing formal agreements for the division of competences and financing between governance levels
  • Develop national frameworks and strategies to support disadvantaged young people in entrepreneurship, and clearly assign responsibility for this policy portfolio to a single agency or ministry
  • Embed entrepreneurship into national education frameworks, while also providing integrated packages of entrepreneurship support in other settings to reach young people outside of the education system

Among the recommendations for local actors include:

  • Balance the need to meet pressing local labour market demands with ensuring that VET helps to move local economies to higher skilled and value-added products and services
  • Encourage VET teachers and trainers to maintain contact with local employers and industries to keep their skills and knowledge up-to-date
  • Boost employer engagement in apprenticeships
  • Tailor the delivery of apprenticeship programmes so that they work better for a broader range of employers, including SMEs, and disadvantaged populations
  • Forge connections across administrative borders in developing and co-ordinating entrepreneurship and SME policies
  • Work with organisations that have already established relationships with disadvantaged youth to maximise the reach of entrepreneurship programmes
  • To better reach disadvantaged youth, provide integrated packages of support, use hands-on learning methods, and involve entrepreneurs in programme delivery

Decentralisation?

The report concludes that local actors need both flexibility to tailor delivery of national policies to local conditions and the capacity to use this flexibility to ensure informed decision-making.

It is noted that this doesn’t necessarily mean political decentralisation, but rather ensuring the right tools are used to add local flexibility while maintaining national coherence.


If you found this article interesting, you may also like to read our previous blog on Local Enterprise Partnerships

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Equal to the task? Addressing racial inequality in public services

huddleCLR

Throughout October, a series of events to promote diversity and equality will take place as part of Black History Month. Although there are many achievements to celebrate, it is an unfortunate fact that many people in the UK today still experience disadvantage due to the colour of their skin.

Over the summer, reports by the Equality and Human Rights Commission (EHRC) and the UN Committee on the Elimination of Racial Discrimination (CERD), found that racial inequality in the UK was ‘worryingly high’.

In its biggest ever review of race inequality in the UK, the EHRC concluded that:

“while for certain people life has become fairer over the past five years, for others progress has stalled and for some– in particular young Black people – life on many fronts has got worse.”

Audit of racial disparities announced

The government responded quickly by announcing an audit of racial disparities in public services. It promises to ‘shine a light on injustices as never before’.

From summer 2017, Whitehall departments will be required to identify and publish information annually on outcomes for people of different backgrounds in areas such as health, education, childcare, welfare, employment, skills and criminal justice.

As well as enabling the public to check how their race affects the way they are treated by public services, the data is also intended to help force services to improve.

The audit is being called ‘unprecedented’ – and it certainly is – up until now, public services in the UK have not systematically gathered data for the purposes of racial comparison. Indeed, according to the FT, very few countries, if any at all, currently produce racial impact audits.

‘Worryingly high’ levels of racial inequality

The audit will have its work cut out.  The review by the EHRC found that, compared to their White counterparts, people from ethnic minorities were more likely to be:

  • unemployed
  • on low wages and/or in insecure employment
  • excluded from school
  • less qualified
  • living in poverty
  • living in substandard and/or overcrowded accommodation
  • experiencing mental and physical health problems
  • in the criminal justice system
  • stopped and searched by police
  • a victim of hate crime
  • a victim of homicide

Institutional racism

Similarly, the CERD findings into how well the UK is meeting its obligations under the International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) raised serious concerns about the level of institutional racism in UK public services. Omar Khan, of the Runnymede Trust, suggested that the findings would ‘embarrass the UK on the world stage’.

Longstanding inequalities in access to services, the quality of care received and patients’ health outcomes were criticised, as was the over-representation of persons belonging to ethnic minorities in psychiatric institutions.

The committee echoed the EHRC’s concerns regarding higher unemployment rates and the concentration of persons belonging to ethnic minorities in insecure and low-paid work.  They also criticised the use of discriminatory recruitment practices by employers.

In education, there were concerns regarding reports of racist bullying and harassment in schools, and the lack of balanced teaching about the history of the British Empire and colonialism, particularly with regard to slavery.

The committee also concluded that there had been an outbreak of xenophobia and discrimination against ethnic minorities, particularly since the EU referendum campaign.  Indeed, the rise in post-Brexit racial tensions has been widely acknowledged.

Equal to the task?

Although the audit has been welcomed by many, including the EHRC, others have raised concern about the extent to which it will tackle the root of the problem.  Danny Dorling, of Oxford University, remains sceptical, stating that “within two or three years every single one of these audits is forgotten”.

Some have noted that in order to be effective, the audit will also have to capture outcomes for migrant families, and for poorer White people, who also suffer from discrimination and disadvantage.  Others, including Labour’s Angela Rayner, shadow equalities minister, have noted that there is a ‘huge gap’ in the review as it would not include the private sector.

The EHRC have called upon the government to createa comprehensive, coordinated and long-term strategy to achieve race equality, with stretching new targets to improve opportunities and deliver clear and measurable outcomes.”

Certainly, the data produced by the racial equality audit may well provide some basis for the establishment of such targets.

So while this October there is cause for celebrating the progress made so far, the findings of the EHRC and the CERD underline just how entrenched and far-reaching race inequality remains.  As the EHRC states:

“We must tackle this with the utmost urgency if we are to heal the divisions in our society and prevent an escalation of tensions between our communities.”


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Basic Income – a simple solution to a complex problem?

By Heather Cameron

If you want to incentivise work at every level of income then Basic Income is simply the best system.” (RSA, 2015)

Last month MPs in the UK Parliament were asked to consider the question of introducing a universal basic income to be payable unconditionally to all citizens without means-testing or work requirement.

The motion, which was tabled by Green Party MP Caroline Lucas, says the policy “has the potential to offer genuine social security to all while boosting entrepreneurialism”.

While no vote was taken on the policy, and it is unlikely to be made law any time soon, the motion raised the profile of the issue by enabling MPs to add their name in support.

And with ever increasing global interest in the idea, and basic income pilots set to spring into action all over Europe this year, perhaps it’s not as far away from becoming a reality in the UK as we may think.

Pilots

A number of cities and countries across Europe have committed to trialling a basic income.

Last year Finland announced a national basic income experiment, scheduled to start in 2017, which will be the EU’s first nation-wide project. It will see up to 100,000 Finnish citizens paid an unconditional income for a period of two years, after which the results will be analysed to see whether it should be rolled out nationally.

Trials have also begun in the Netherlands. The Dutch city of Utrecht will pay a small group of benefits claimants, whether they work or not, a basic income of £660 a month to provide a basic standard of living and help them avoid the ‘poverty trap’.

In Switzerland, a national referendum on a basic income is planned for this year, and support for the idea has also been reported in France and Canada.

While it is too early to tell whether these pilots will have the desired positive effect, the concept of a basic income is far from new and there have been signs of success from past experiments.

Positive outcomes

In the 1970s, a basic income social experiment, ‘Mincome’, was carried out in the Canadian town of Dauphin, which involved making payments to the entire population, relative to income to cover basic living costs. The programme succeeded in reducing poverty, improving health and alleviating other urban problems.

More recent basic income projects in developing countries have also helped alleviate poverty. In Namibia, a coalition of aid organisations trialled a basic income, funded through tax revenues, of 100 Namibian dollars to each citizen. The result: crime was reduced, children attended school and many villagers used the money to fund micro-enterprises. Meanwhile, in Uganda, a similar programme increased business assets by 57%, work hours by 17% and earnings by 38%.

Critics of such a system say that it would cost the state too much money, and would lead to welfare dependency and a reluctance to work, ultimately resulting in higher unemployment.

A recent survey undertaken in Switzerland would seem to refute this. It indicates that only a very small proportion of the population would stop working if they had a basic income and a majority believe that it would “relieve people from existential fears.”

Similarly, the Canadian experiment found no substantial difference in either female or male unemployment. There were changes in the labour market, as would be expected, with a reduction in working hours within families as a whole. Female spouses reduced their working hours to spend more time with children; and hours were reduced for adolescents within the family who entered the workforce later, suggesting that they were able to stay in education longer.

Way forward for the UK?

The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) has recently concluded that there is a strong practical case for basic income in the UK to replace the current tax and benefits system – “it underpins security, replaces the complexity of the current system, and provides a platform for freedom and creativity.”

The RSA report sets out a potential basic income model for the UK. It would provide a universal payment to every citizen, (with restrictions for migrants and those serving custodial sentences). A ‘basic’ amount paid to everyone of working age would provide incentives to work, therefore mitigating against low pay traps of the current system. It would also, the RSA report claims, mitigate against some of the negative distributive effects of basic income schemes by redistributing from higher earners to families with children.

The report calculates household income, comparing the proposed model with the current system of likely Universal Credit/National Living Wage income for 2020/21. In all instances, ranging from single parent families with children under or over five to couples with children under or over five, there was a gain for household income under the basic income model.

With the current welfare system and all its complexity, the new Universal Credit apparently not doing what it’s supposed to and the continued increase in job automation, is this really just a simple solution to a complex problem?

Perhaps by the end of 2016, there will be more evidence for the UK to seriously consider.


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