Workers in the UK would be paid around £ 2,100 more a year on average if wages had matched a boom in corporate dividends to shareholders over the past two decades, according to a report.
The Common Wealth think tank highlighted a gap between earnings from work and business ownership, saying far-reaching reforms were needed to restore power amid growing inequality.
In the face of increasing pressure on workers, as wages cannot keep pace with rising living costs, it called on the government to take steps to increase workers’ rights and trade union bargaining power, as well as an increase in care funding and social security benefits.
It is happening while ministers are facing increasing pressure to support an unexpected tax on energy producers to counter the cost-of-living crisis. Following a rise in wholesale oil and gas prices, exacerbated by Russia’s invasion of Ukraine, energy companies Shell and BP are expected to report a sharp rise in profits later this week. Separate research from the Common Wealth showed that the two companies have channeled £ 147 billion to shareholders through dividends and share buybacks over the past decade.
The business minister, Kwasi Kwarteng, has lobbied against an unexpected tax and wrote to energy companies over the weekend urging them to increase investment to prevent more drastic action by the government.
Chancellor Rishi Sunak has signaled that he is considering an unexpected tax if Shell, BP and other exploration companies fail to spend profits on developing renewable energy projects.
Shadow Climate Change Secretary Ed Miliband said: “Kwasi Kwarteng’s letter is not worth the paper it is written on for millions of families facing the cost of living crisis.
“Families want action to deal with the bill crisis, not an empty, insulting piece of political spin,” said Miliband, adding that energy investments were made over five to 10 years and that unplanned, untaxed unexpected profits would always be returned to shareholders.
The Common Wealth said in a May Day statement along with a group of other progressive think tanks, including Autonomy, the Center for Local Economic Strategies and the Women’s Budget Group, that Britain’s largest companies are benefiting from thriving profits, while ordinary people experienced an unprecedented attack on their financial security.
The results of the report, based on figures from the Office for National Statistics, found that total employment compensation for UK households increased by 25% in total between 2000 and 2019 after taking into account inflation and growth in the UK working age population.
However, dividend payments from UK-based private companies increased by 132% over the same period.
The Common Wealth said that if the wage-dividend ratio had remained the same over the last two decades, earnings from work would have been 8% higher, equivalent to £ 2,100 per year. person of working age.
Official figures show that average wages in the UK remain at their peak before the 2008 crisis, after inflation is taken into account, after more than a decade of stagnation, in the worst performance of workers’ wages since the Napoleonic Wars. Forecasts from the Office for Budget Responsibility, the government’s independent finance watchdog, show that average wages are expected to fall this year after inflation amid rising living costs.
Mathew Lawrence, director of the Common Wealth, said the government could launch a series of reforms to narrow the gap between wealthy asset owners and working people.
“Political decisions about employment law and the rules of business have created an economy where power is stacked in favor of capital and collectively created value is concentrated upwards,” he said.
“What we have built we can recreate. We can create an economy where working people have a much greater share in the wealth they create. But it will require a fundamental rebalancing of economic power.”