Britain's Wages Crisis—Is ‘Predistribution’ or ‘Redistribution’ the Way Forward?

Abstract

Is ‘predistribution’ as championed by Ed Miliband, or old fashioned ‘redistribution’ as adopted, if stealthily, by Labour from 1997, the best way to create greater equality? Some critics have argued that a strategy of predistribution—aimed at closing the income gap before the application of taxes and benefits—would not work and that it will be necessary to rely mainly on redistribution. This article examines the potential impact of weak and more radical predistribution‐style measures on one of the key drivers of inequality—‘wage compression’. It examines the potential of a mix of policies for raising the wage floor. It argues that reliance on traditional redistribution would face its own set of constraints and that creating a more equal distribution of the cake, before taxes and benefits, is a necessary condition for lowering the risk of continuing economic crisis.

From wage supplements to a ‘living wage’? A commentary on the problems of predistribution in Britain’s summer budget of 2015

“…In contrast, the 'empowerment' approach to predistribution would, Ussher (2012) suggests, allow individuals to react more positively and confidently to contemporary uncertainties. For Lansley (2014), a weak version of predistribution would do little to address contemporary inequalities, while a 'radical' version would challenge and seek to change such inequalities.…”

The Neoliberal Phoenix: The Big Society or Business as Usual

“…9.2 It is indeed the case that, in recent decades, wages particularly at the lower to middle of the income spectrum have tended to stagnate and, in many cases, failed to keep up with inflation (Lansley, 2011). The possibility of much deeper erosion is raised when one considers that the erosion of the welfare safety net together with proposed tougher sanctions for refusing employment, in a very slack and competitive labour market, places significant sections of the workforce in a very weak position, where exploitation becomes increasingly likely.…”

The ‘living wage’ and low income: Can adequate pay contribute to adequate family living standards?

“…This finding can be interpreted in terms of low-paid workers' living standards having fallen behind social expectations, as a result of their limited gains from long-term growth. Lansley (2014:3) links growing inequality of income before tax and benefits with a near-doubling of low pay over thirty years, as the bottom half of earners bear the brunt of a decline in the wage share of income. One broad objective of a living wage can be to set a pay standard designed to keep pace with changing social expectations and living costs.…”

“…The potential role of wage floors in this process has drawn scepticism both from those who point out that low pay and low income only partially overlap (Bennett and Lister, 2010;Grover, 2016a) and by those arguing that truly effective predistribution would require much wider, structural changes, including in labour power in relation to capital, and the distribution of skills (Lansley, 2014, Kenworthy, 2013. However, this article argues that substantial rather than marginal increases in pay floors can at least make an important start in complementing redistributive measures addressing low income, which have struggled to be effective in a low-wage economy.…”