The rise of inequality has always been concomitant with the drop in Labour share of national income. Since the 1990s, productivity gains no longer translates to rises in pay. In fact, an increasing larger share of the benefit now accrues to owners of capital. A fact which is reiterated many times in Thomas Pikettys 700+ page omnibus Capital in the 21st Century. ,an all time best seller. A greater reliance on imports is associated with a bigger decline in labour’s take with FTAs greatly exacerbating this trend. Weaker members of FTAs are inundated by imports from members with surplus, wiping out local industries which could have manufactured the same products and provide employment albeit at a slightly higher cost. In the late 1970s European workers enjoyed high labour shares thanks to stiff labour-market regulation. The labour share topped 75% in Spain and 80% in France. But when indiscriminate product-market liberalisation swept Europe in the early 1980s, labour share tumbled. Privatisation has further weakened labour’s hold, creating a lost generation. The solution in accelerating technological change and rising productivity is supposed to create the potential for rapid improvements in living standards. Yet if the resulting income gains prove elusive to wage and salary workers , that promise may not be realised.
Posted on: Tue, 16 Dec 2014 19:20:42 +0000
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