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10 things we learnt from A better off Britain

This week, the CBI launched A better Off Britain, business’ blueprint for raising living standards. It’s an extensive report, highlighting the best of what works and what more businesses can do to create the jobs and wages that will help everyone benefit from growth. Here’s a run-down of the 10 key facts from the report:

1. Business still spends the same proportion of income on employing staff, but wages are a shrinking part of this Business spending on employing workers today – through paying wages, contribution to pensions and making National Insurance contributions – is 72.9% of a business’ income. This is a little above the average over the last 60 years, but more of it goes to the government or into pensions of current and former employees. The CBI are asking for the employee NICs threshold to be raised to £10,500, saving dual-earner households £363 a year.


2. Working couples spend over a third of their net wages on childcare

The cost of childcare in the UK is high and rising fast. Families where both parents are working spend 33.8% of their net income on childcare, compared to the OECD average of 12.6%. The CBI are asking government to extend the 15 hours free childcare so that it is available to all one and two year olds as well as three and four year olds. This would save a family with a one year old child £3,430.


3. Productivity and competitiveness define what firms can pay The value created in each hour an employee works determines what businesses can afford to pay their staff. For example, in manufacturing this may be the number of widgets made in an hour, and in hospitality it might be the value added to the experience of the customer. The CBI report argues that in the long term, improvements in firm productivity and competitiveness are the only sustainable way of raising living standards.


4. The UK has scope to up its game on productivity

Productivity growth has been exceptionally weak since the crisis. Output per hour is still 16% lower than where it would have been had productivity continued to rise at the same pace as before the crisis. Overall, productivity in the UK also lags behind other countries like the USA and Germany. The CBI is calling on firms to rise to the challenge and work smarter to raise productivity and help drive higher living standards.


5. A third of workers are still stuck in the bottom pay group even after 14 years More and more ‘middle jobs’ require higher skills – by 2022 50% of jobs will require skills like foundation degrees and professional diplomas or higher. But as a result, routes into higher-skilled, higher-paid work are becoming more difficult for workers entering our labour market at the bottom. Research commissioned by the CBI found that one in three workers who were in the lowest wage group had not moved up at all 14 years later.


6. Better vocational routes to higher skills are needed to help workers get on, and to fill the skill shortages that worry business

The vast majority of the UK’s 2020 workforce have already left school and are working. So businesses will not be able to find all of the higher-level skills that they need only by recruiting young people looking for their first job. The CBI believes that helping workers to get on, and tackling skill shortages has the same solution – higher level vocational education. They believe that we need more vocational routes to higher skills, like apprenticeships, that allow people to earn and learn at the same time. Businesses must work with colleges and universities to create these routes to higher skills.

7. Education is the best long term tool to boost growth, living standards and social mobility Education is a very significant driver of an individual’s living standards. The difference in achievement at school between children from the most deprived and least deprived backgrounds explains a large part of the difference in their earnings in later life. Children from the poorest households are behind other children by the time they are three years old, and the gap widens as they go through school. The CBI believes that improving the quality of our schools to the same level as the best in Europe will be worth £8 trillion over the lifetime of a child born today, and in giving every child a better start in life it will significantly increase social mobility.


8. Business has a big role to play in education

Businesses rely on their people for success, and the CBI argue that as a major stakeholder in our schools system, firms should do their bit to help schools to deliver more. This might be delivering work experience, ensuring careers advice matches up to the jobs in demand or giving their time and expertise as school governors. The CBI are also asking firms to support social mobility by opening their doors to talented people from a wide range of backgrounds and experiences.


9. Saving in the UK is low, by international standards Savings are important because they can help provide a buffer when things go wrong. In the last few years, the long squeeze on household incomes has eaten into families’ savings, but even before this households in the UK were not saving as much as those elsewhere. In the UK our net savings rate[1] is just 2.4% compared to a 7% average across the countries that use the Euro and 10.3% in Germany. One in five adults in the UK has no savings whatsoever.


Read more like this: TAX MYTHBUSTER: 8 MYTHS ABOUT BUSINESSES PAYING TAX Confused by the tax debate? Check out our mythbuster on common misconceptions What role can business play in building a better off Britain?  Business must have a positive vision that sets out how we can ensure everybody benefits from growth, says the CBI
10. Businesses can help people to build a buffer for a rainy day

As the economy improves, the CBI thinks more should be done to help people to save. They’re asking the government to make schemes simpler but they’re also asking businesses to think about offering a wide range of workplace saving options – like Corporate Individual Savings Accounts (ISAs) which deduct regular savings for staff through payroll, or share schemes.



So that do you think? What more could firms do to raise living standards through work? Share your views at @bizdebate #BetteroffBritain



[1] measured as net household disposable income minus consumption as a percentage of household income


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