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Call for new approach to poverty

A major rethink of how to tackle poverty and inequality is needed, the Smith Institute suggests.

The think tank, which is independent but has historic links with Labour, has published a report which concludes that action is needed to stop the rise of poverty and inequality in theUK.

The report states that social policy and labour market policy must be reconnected, and that full employment is a prerequisite for successful implementation of welfare policies.

The Institute also recommends more transparency in executive pay, full disclosure of the ratio and distribution of pay within a company, effective enforcement of the national minimum wage, rebuilding the power of the unions and including labour clauses in public contracts.

Additionally, it suggests that a new national programme should be developed to raise skill levels, boost productivity and improve quality of employment. This will require involvement from civil society institutes as well as Government, they state.

Paul Hackett, director of the Smith Institute, said: “This report shows that in order to reduce poverty and inequality, we need to rebalance the power relationship in the workplace. The policy focus should be more on low pay, than high pay; and more on job creation than labour market deregulation. We need a new social contract which provides sustainable jobs and fair pay.”

David Coats, research fellow at the Smith Institute and principal author of the report said: “There is an emerging consensus that high levels of poverty and inequality are a cause of economic instability.

“If governments want to build a sustainable model of economic growth then they need to continue their redistributive efforts and ensure that there are effective labour market institutions that deliver decent pay, high productivity and fairness in the workplace. Tackling unemployment by getting the economy growing again must be the top priority.”

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