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Economic Justice

Fabian Society report calls on government to use a new system of economic indicators

The government’s focus on GDP, inflation and unemployment has been branded ‘inadequate’ by a new Fabian Society report that advocates a new system of economic indicators.

 

Measure for Measure: Economic indicators for a fair and prosperous society by Andrew Harrop and Robert Tinker proposes a new suite of economic indicators in which median income replaces GDP as the central determinant of economic success.

 

The report calls on the next government to adopt its full list of twenty measures as official indicators of economic success and to set goals for each one to track progress over the rest of the decade.

 

While the government has been keen to promote the economic recovery, defined by four successive quarters of GDP growth, Measure for Measure demonstrates that for many of the proposed new economic indicators, performance is much worse:

  • Both median incomes and median earnings have fallen to levels last seen in 2001
  • Almost a quarter of households have more unsecured debt than savings and the number is rising
  • 20 per cent of adults under 25 are underemployed (want to work or work more hours), compared to 15 per cent before the crisis
  • The current account deficit is the worst since comparable records began
  • Productivity per hour of work has not increased since 2007
  • 25 per cent of households don’t have enough money to secure an adequate standard of living, up from 21 per cent in 2008

The report has also identified trends in our indicators that were taking place before the financial crisis, but continue to be problematic, storing up risk for the future. They include:

 

  • Between 1997 and 2008 household saving fell from 8 per cent to 2 per cent of household resources
  • Business investment fell from 11 per cent to 8 per cent of GDP
  • The gap between the incomes of the top 1 per cent and everyone else grew over decades and especially in the 2000s.  Incomes at the 99th percentile are over 5 times median incomes – they were 3 times in the late 1970s.
  • Since the late 1980s there has been no change in the number of workers on low pay (over 20 per cent of workers) despite the introduction of the National Minimum Wage