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This contribution is based on the proposition that labour productivity and income inequality are closely and significantly related; this relies on the proposition that that there is a strong relationship between productivity, inequality, economic growth and real wages. Productivity growth is the key determinant of how demand can grow without inflation, thereby reducing inequality of income, wealth and opportunity. Indeed, productivity is a significant factor in terms of inequality. It is also the case that the slowdown in productivity growth and increase in inequality that have occurred over a number of years now has affected many advanced economies, as well as others, and has become more pronounced following the Global Financial Crisis. Although weak productivity growth and increase in inequality predate the Global Financial Crisis and the subsequent Great Recession, they have both been exacerbated following them. We deal with these problems from a political economy perspective, and from the point of view that emphasises the structure and power in an economic system. We focus on the UK relevant experience along with other countries.

Productivity and inequality in the UK: a political economy perspective