The head of the International Monetary Fund (IMF) has told the world’s elite that they need to consider a fairer redistribution of wealth to a stave off the crisis of inequality facing working people.
Speaking at the World Economic Forum in Davos, IMF head Christine Lagarde warned that hopelessness, distrust and inequality are fuelling populist movements.
Her comments came as Unite and the TUC called on Theresa May to make good on her pledge for a “fairer Britain” by supporting working people, following new Office for National Statistics (ONS) figures that show real pay growth has stalled at 1.7 percent for the last five months.
In Davos, Lagarde referenced a recent Oxfam report which showed that just eight billionaires have amassed as much wealth as the 3.6bn people who make up the poorest half of the global population.
“With lower growth, more inequality and much more transparency, you have the good ingredients for a crisis of the middle classes (a US term for working people) in the advanced economies,” said Lagarde.
“Policymakers need to get the signal now, and really think about how to address the public discontent. (The policy response) needs to be granular, it needs to be regional, it needs to be focused on what will people get out of it. It probably includes more redistribution than we have in place at the moment.”
While the rich and powerful gathered in Davos, the ONS released statistics showing that real pay growth has stalled at 1.7 percent over the last five months.
Keep your promise
Unite assistant general secretary Steve Turner said the Prime Minister should take heed of Lagarde’s advice and stick to the promise she made to help working people as she took office.
“The Prime Minister should walk the walk and not just talk the talk when she says she supports working people,” he said. “This can be accomplished by immediately abandoning the government’s failed austerity programme and adopting an industrial strategy which commits to the sort of mass public investment we need to kick-start an economy that’s now lying dangerously stagnant.
“With unions leading the way amid a renewed emphasis on sector-level collective bargaining, we can make inroads into a new economic order in which all people at the very least earn a true living wage.”
TUC General Secretary, Francis O’Grady, said the government needs to take action immediately to mitigate the falling value of people’s wages.
“Pay gains are being slowed down by rising prices, and this week’s figures showing a sharp hike in the cost of everyday goods suggests there is worse to come,” O’Grady said.
“If working people are going to feel a difference in their finances, their pay needs to grow faster. They will want to know what Theresa May has planned to deliver the ‘fairer Britain’ she promised in their wages.”
“Ministers can help directly by raising the minimum wage and giving public sector workers a long-overdue pay rise,” she added. “The government can also lay the foundations for a higher-productivity, higher-wage economy by using its new industrial strategy to invest more in skills and infrastructure.”