A new study by the Institute for Fiscal Studies (IFS) has highlighted a worrying trend in the UK labour market, with the labour share declining over the past decade. The labour share, which represents the proportion of national income earned by workers, has fallen from 63.5% to 61.8% between 2008 and 2018. Conversely, profits have risen to 38.2% of national income, up from 36.5%.
The IFS attributes the decline in the labour share to changes in the global economy and shifts in the balance of power between workers and employers. The organisation notes that the rise of automation and the gig economy has led to increased competition for jobs and lower wages.
The study's findings have significant implications for UK citizens, who may see their wages stagnate or decline in the face of rising profits. This trend is particularly concerning for low- and middle-income households, who rely heavily on wages to make ends meet.
The UK Government has been accused of failing to address the issue, with many critics arguing that policies such as the National Living Wage have not gone far enough to address the issue. Labour Party leader Keir Starmer has called for a more radical approach, including increased taxes on corporate profits and greater investment in education and training.
The IFS study is the latest in a series of reports highlighting the challenges facing the UK labour market. As the economy continues to evolve, it remains to be seen whether the Government will take action to address the decline in the labour share.