Prose / Prose and Poems

Public Sector Pay Rises Would Improve All Our Lives

Economic Growth

Public Sector pay rises would be good for us all. The pay cap imposed upon our public sector both North and South of the border stagnating incomes of the poor and middle classes was the real reason for the global financial crisis and government’s response of pay restraint for the poor and tax cuts for the rich has increased income inequality, the widening of the income gap between rich and poor is bad for economic growth.

The prolonged period of higher inequality in advanced economies was instrumental in the global financial crisis as it led directly to the overextension of credit, and a relaxation in mortgage-underwriting standards specifically in the USA. 

‘Trickle-down” economics simply don’t work, if governments both sides of the Tweed really want to increase the pace of economic growth they should concentrate on helping the poorest 20% of citizens.

Anti trade union measures, globalization and tax policies that favour the wealthy have all played their part in widening inequality.

The way income is distributed matters for growth. If the income share of the top 20% increases, then GDP growth actually declines, benefits do not trickle down. In contrast, an increase in the income share of the bottom 20% results in higher GDP growth, so we all benefit. More than that the poorest in our society start to feel valued again and regain some of their dignity.

If the UK and Scottish governments want to decrease inequality and grow the economy then they need to support trade unions and raise the income share of the poor. The easiest way to do this is to increase the pay of public sector workers funded by increasing taxes on those earning the most.

As well as progressive tax policies to boost, rather than restrain economic growth, both governments should also be increasing investment in health and education policies that reduce poverty,

Politica parties that are prepared to tax both wealth and property, introduce more progressive income taxation, remove opportunities for tax avoidance and evasion, and introduce a modern social benefits system aimed at the needs of the 21st century are the only ones who can truly deliver on economic growth and a fairer society.


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