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Not a middle class recession

This recession was predicted to become a middle class or white collar recession, because of the distress of the financial sector. In reality, however, low-skilled, low-educated and young workers are being hit hardest.

They are seeing a bigger deterioration in their job prospects than skilled and educated ones, according to a report by the Institute of Fiscal Studies (IFS).

When compared with previous recessions, this time, a sharp rise in unemployment may have a bigger impact on the relative living standards of those losing their jobs.

According to the IFS, this is mainly because over the past 20 years, out-of-work benefit entitlements have been falling relative to average incomes.

Although job prospects of high earners have not been hit disproportionately, the report says, their incomes are likely to fall or stagnate for the next few years.

The IFS says that a significant fraction of those people at the top of the income distribution work in the financial sector, and receive more of their income from savings and investments.

This makes top incomes particularly sensitive to the performance of financial markets.


Cricket - thumbnail

England vs Australia: pensions

Well, the cricket season is here, and England and Australia are stepping up to the wicket. Although we compete with each other in the sporting world, when it comes to pensions, Australia’s pension programme is held up as a model for our auto-enrolment initiative. Auto-enrolment was introduced because people weren’t saving enough into their pensions, and it is still early days but signs are positive. However, in Australia, saving into a pension is compulsory, and in fact employers are the ones who have to pay in. Employees in Australia can make additional contributions into their pensions, but they don’t have to. Should the onus be on the employer or employee to save? Well in the UK we think it’s both, but to get ‘adequate’ savings for retirement it’s the employee who has to pay more in.


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