2020 Vision: Work, welfare and incomes into the next decade Steven Toft

Themes Economic context Employment Changing shape of work Pay and incomes Changing shape of the workforce Ageing society and pensions

Context: Deep recession and slow recovery In Chart by Resolution Foundation based on ONS and Bank of England data

Everyone hit – some harder than others Indices of GDP per capita: (2008 = 100, constant PPP) Chart by Resolution Foundation

Record employment rate Source: ONS

The employment mix has changed Source: ONS

Earnings have suffered Chart by Resolution Foundation

The housing mix has changed Change in housing tenure, 1994‒1996 to 2013‒2015, by income quintile Source: Institute for Fiscal Studies

Housing costs have eroded incomes Chart by Resolution Foundation

Benefits doing a lot of heavy lifting Chart by Institute for Fiscal Studies based on DWP data

Benefit squeeze Chart by Institute for Fiscal Studies

Result: stagnating or falling incomes Cumulative change in real (CPI-adjusted) non-pensioner equivalised disposable household income (after housing costs) since 2003-04 Chart by Resolution Foundation based on DWP data

Changing shape of the workforce The effects will be felt further up the skill ladder, as auditors, radiologists and researchers of all sorts begin competing with machines. A labour market with great prospects for those able to demonstrate talent early, but with fewer pathways for those who need to progress to higher skilled occupations through career development in work. - UKCES Source: ONS & UK Commission for Employment & Skills

Economic disadvantage is local Source: Office for National Statistics

Proportion of the population over 65 Source: Office for National Statistics

Reliance on benefits and pensions Source: Family Resources Survey, June 2016

Was postwar living standards growth a blip? Source: Bank of England and Office for Budget Responsibility

There may be trouble ahead.... We seem to be in a period of low growth for the next 5 years – possibly longer Earnings growth likely to be low High employment but less secure Benefit cuts likely to lead to rising inequality and falling incomes Changing employment structure – skills at a premium Ageing population puts pressure on welfare and public services Pensioners keeping the economy afloat in some areas

Building resilience Building capacity Innovation hubs Renewable energy Community housing Skills Engaged community Social activities Places to meet Community centres Libraries Pubs Good connectivity Physical – public transport Virtual – broadband “Enable local people to find ways to rebuild and develop their local economies. In doing so, they are creating long-term sustainability and building social capital at the same time as strengthening their local economies and developing skills and employability for themselves and others.“

Social capital and social infrastructure “Social capital is recognised as a driver for economic growth and as a facilitator for a variety of improvements for individual and wider community well-”being.” - ONS “It is another form of capital that may matter every bit as much to wealth and well-being in society – social capital. There is now a strong body of evidence, looking across a large range of countries and over long periods of time, that high levels of trust and co-operation are associated with higher economic growth.” – Andy Haldane, Chief Economist, Bank of England