23 February 2018

Low and middle earners are set to be hit hardest by a projected period of sluggish growth, a new report from the Resolution Foundation think tank has said.

It is expected that those on low and middle incomes will see their living standards stagnate until 2020, and that the financial year 2017-18 will see the worst income growth since 2011-12 and the third worst in the last quarter of a century.

While higher income families are set to see a 10% rise in income over the next three years, those on low and middle incomes will see growth of only 2%, the report, which was based on an analysis of the OBR's latest economic forecast together with policy impact assessments, found.

As a result, income inequality is expected to reach record highs by the early 2020s, with the Resolution Foundation warning that increases in statutory minimum wages are more than offset by the negative impact of welfare cuts.

Torsten Bell, Director of the Resolution Foundation, said: "This parliament risks seeing the first sustained rise in income inequality since the 1980s."

In its influential Manifesto for Labour Law, the Institute of Employment Rights recommends a reform to the framework of labour law to shift the focus away from individual rights to collective ones.

Over the last 35 years, the UK has been moving towards an increasingly individualised system of employment protections, which has deepened the imbalance of power between employers and workers.

When workers organise collectively through trade unions they are better able to negotiate for fair pay and conditions, keeping income inequality in check, than when they face an employer alone.

Our experts recommend reversing the successive laws that have reduced trade union rights in the UK over the last 35 years - during which time income inequality has soared - and reinstating sectoral collective bargaining, through which employers' associations and trade unions can negotiate minimum pay and conditions across entire industries.

Click here to read more about the Manifesto for Labour Law