Monthly Archives: November 2023

Jonathan Portes summarises his recent article in Political Quarterly on the pension triple lock, arguing that the much-maligned policy has in fact been a success.

In the 1990s, well over a quarter of Britains pensioners lived in poverty. It is now fewer than 1 in 5, while the number of relatively well-off pensioners has risen sharply. Meanwhile, spending on pensions has risen from just under 5% of GDP to about 5.5%, while working age benefit spending has fallen by a similar amount. More broadly, a growing proportion of state spending benefits the elderly, with NHS spending growing much faster than that on education. .

This has focused attention on the triple lock which currently governs the uprating of the basic state pension. Introduced in 2011, it provides that the pension should rise each year in line with earnings, prices, or by 2.5%, whichever is higher. The impact of this has been that the pension has risen by a little more than 10% compared to either prices or earnings since its introduction.

This year the triple lock will again result in an above inflation rise, at a net fiscal cost of up to 2 billion, leading to renewed calls for the triple lock to be ended or scaled back. Politicians remain nervous: neither the government nor the opposition has been prepared to endorse it wholeheartedly or commit to reform.

Criticism of the triple lock has several dimensions:

While there is some truth in these criticisms, they largely miss the point. The cancellation of the earnings link by the Thatcher government meant that the value of the state pension fell from a quarter to a sixth of average earnings by the early 2000s. New Labours response was to address pensioner poverty with more generous means-tested benefits rather than boosting the basic pension. Meanwhile, tighter regulation, lower long-term interest rates and higher taxes led to a progressive collapse in the provision of final salary pension schemes in the private sector, only partially if at all replaced by much less generous defined contribution schemes.

The Pensions Commission, established in 2003, was a response to this collapse. Its key insight was that current policy and existing trends would mean that by the mid-2030s, about two-thirds of all pensioners would be claiming means-tested benefits. Benefit spending would soar. Moreover, this would in turn reduce private pension income and coverage, because of the resulting disincentives to save.

So when the Commission recommended the restoring of the earnings link, in combination with the new system of auto-enrolment into workplace pensions, and progressive rises in the state pension age, the objective was to rebalance the system. First, from a state system that built in an ever-growing reliance on means-tested benefits, back towards one where the universal basic state pension was the key pillar for most pensioners; and second, from a private pension system that provided well for a shrinking minority of public sector (and some very well-paid private sector ones) to one that provided a meaningful supplement to the basic pension. The proposals were a package, and, commanding bipartisan support, the key elements were accepted by the Labour government and implemented and, in the case of the triple lock, supplemented by the Coalition.

Two decades on it is difficult to see the results as anything other than a remarkable success. Pensioner poverty has fallen sharply. Meanwhile, about 11 million people are enrolled in workplace pensions; this has increased future projections of pensioner incomes, and reduced the level of undersaving.

So can we say job done and abandon the triple lock? In short, no. While comparing pension provision across countries is fiendishly difficult, the level of the basic state pension is still relatively low in the UK. Thats not problematic if, and only if, we can continue to build up private provision for most future pensioners. The Pensions Commission analysis that this requires a basic pension at a reasonable level, relative to earnings remains valid. Its hard to believe the right level is below 25%.

And, despite auto-enrolment, the need for the basic pension as a floor for retirement incomes is likely to increase, not decrease; the rapid decline of defined benefit schemes in the private sector means that many middle-income earners will see very sharp drops in income when they retire.

Its true that a rise in the basic pension benefits millionaires. But state pension spending makes up a substantially greater fraction of the incomes of poor and middle-income pensioners. And pensioners with substantial private pension and investment income pay income tax at their marginal rate on any state pension increase. Overall, increasing the state pension is relatively progressive.

And further targeting spending has drawbacks. It requires more means-testing, and that in turn impacts on incentives to save among those on lower and middle incomes. Meanwhile, while it is true that benefit cuts have increased poverty and deprivation for working-age people on low incomes, especially the disabled and those with larger families, this is overwhelmingly an issue of inequality within generations, not between them, as the chart below shows. The UKs unequal society is everything to do with socio-economic status and other structural inequalities like gender and ethnicity and very little to do with age.

Complaints about millionaire pensioners in valuable houses are not misplaced. But the issue here is the perpetuation and exacerbation of inequality not between generations but within them, as the children of those with large housing wealth will benefit at the expense of those unlucky enough not to have well-off parents.

Finally, while demographic pressures are very real, pension spending is not the only, nor even the main component. And the primary issue here is not how to restrict such spending, but how it should be financed and managed, whether through the state or privately.

Its true that there is no logic to uprating by the higher of earnings and prices. Theres a case, when and if the pension to earnings ratio has achieved a level that meets the objectives set out above, for returning to a simple earnings link.

However, in the meantime, a clear political commitment, even if suboptimal, has considerable advantages: it seems highly unlikely that the basic pension would have survived the austerity years unscathed without it. The triple lock isnt perfect; but it has boosted pensioner incomes and helped make the broader UK pension system more sustainable.

By Professor Jonathan Portes, Senior Fellow, UK in a Changing Europe.

Read the rest here:

In defence of the state pension triple lock - UK in a Changing Europe

View(s):

Magey massina aluth podi viyaparayak patan aragena asarum karapu elavalu saha palathuru geval walata genath denna (My cousin has started a small, new business selling packed vegetables and fruits which can be delivered to your home), he said.

Eh kiyanne eya vyavas yakayek wela (So he is an entrepreneur), noted Serapina.

Eka honda viyaparayak mokada eya sahathika karanawaney asarum karala thiyenne navum eva kiyala (Thats a good business because he is ensuring that when it is packed it means its fresh), said Mabel Rasthiyadu.

COVID-19 kaley podi viyapara kada wetunata honda illumak thibba athya-avashya deval walata (While COVID-19 also saw many small businesses collapse, there was good demand for the supply and delivery of essential items), added Kussi Amma Sera.

Small businesses are an integral, if not, a key part of the Sri Lankan economy. Gone are the days when bankers would frown with disapproval when they spot a shabbily dressed individual coming into the bank, seeking a loan. Now MSMEs (micro, small and medium enterprises) are drivers of economic growth. However, they suffered badly during the pandemic and the ensuing economic crisis and sought and obtained government support and that of banks to delay repayment of loans (with the advent of moratoriums). Some banks also have special grant schemes for MSMEs.

According to the ADB, in Sri Lanka SMEs comprise more than 75 per cent of enterprises and account for more than 20 per cent of exports, 45 per cent of employment and 52 per cent of the countrys GDP (gross domestic product).

President Ranil Wickremesinghes budget also had some focus on MSMEs. It said arecent survey revealed that about 20 per cent of such enterprises have either temporarily or permanently closed down. The survey also revealed a decrease in the performance volume of the currently operating enterprises.

We want to fast track the journey towards a production economy. Therefore, SMEs should be further strengthened, encouraged and facilitated. For this purpose, we are introducing a concessionary loan scheme of around Rs. 30 billion with the support of the ADB, the President said.

He said this programme is the first phase of action which will collectively provide a major impetus to the SMEs. In addition to concessionary credit facilities, capacity development programmes have been implemented for the participating institutions. Steps will be taken to link SMEs with the value chains of large companies in the industrial sector. He said a total amount allocated for the development of SMEs is Rs. 50 billion.

As I walked into the kitchen to get my morning mug of tea and a maalu paan, the phone rang. It was Arty, the intrepid entrepreneur, and the timing of the call was perfect as I also wanted to discuss todays topic on entrepreneurs with an expert.

Recently I read an interesting programme on entrepreneurship organised by the Ceylon Chamber of Commerce, he said. He was referring to Schoolpreneur 2023: School Entrepreneurship Day launched across Sri Lanka on November 16 by the chamber, the Ministry of Education and the ILO aiming to foster entrepreneurial mindsets among schoolchildren.

The programme will be run across schools in the country, with one district chosen from each province to host the event. The districts are Anuradhapura, Badulla, Colombo, Galle, Kandy, Puttalam, Ratnapura, Trincomalee and Vavuniya

A statement on the event said theinclusion of School Entrepreneurship Day in the annual school calendar is designed to act as a catalyst to promote and highlight entrepreneurism among schoolchildren across Sri Lanka.This initiative is geared towards cultivating an entrepreneurial spirit and a set of skills in youth with the goal of contributing to Sri Lankas sustainable and inclusive socio-economic development.

Small businesses are the drivers of many economies, I told Arty, adding that the US Small Business Administration (https://www.sba.gov) is a gigantic organisation and a useful guide to build entrepreneurship in Sri Lanka.

There is a need to encourage more small businesses as they have a trickle down impact on sustaining small communities, particularly at village level, he said.

What we need is a National Entrepreneurship Council similar to the Export Development Board (EDB) which can be governed by the various trade and business chambers as partners with government facilitation to help grow small businesses and guide MSMEs in all facets of a business, I said.

Many banks are now helping small entrepreneurs. While not wanting to single out any particular bank (as all banks have special MSME schemes), A.K.K. Dias, a Gami Pubuduwa entrepreneur and recipient of the grant, speaking about his long history with a bank said: I was there when this bank branch opened in Kiribathgoda; it was also the first day that I started working with the bank. Over the past 15 years, I have been supported with not just capital but with sound advice to expand my business.

In another programme helping MSMEs, an entity was named Lak Nature a business that manufactures a variety of preservative-free, all-natural, ready-to-prepare food by utilising the abundant supply of fruits and vegetables in Sri Lanka. Lakmini Weerakkody, founder of Lak Nature said, My journey began when I came across a newspaper article on the excessive wastage of fresh produce in Sri Lanka. This inspired me to take action and find a way to utilise and minimise this waste. Im also proud to mention that my factory staff is entirely made up of women, as I strongly believe in empowering and supporting women in the workforce.

There are also special programmes nurturing female entrepreneurs. One such programme is by Hatch which in November 2021 introduced AccelerateHER in partnership with the US Department of State. This initiative serves as an accelerator and gender-focused awareness campaign, with the goal of creating and guiding female entrepreneurs of Sri Lanka. Hatch plans to expand AccelerateHER and many more programmes centred on female entrepreneurship in the hope of being a driving force of economic and social change in Sri Lanka.

As I wound up my column, sipping a second mug of tea and eating another maalu paan, I reflected on the need for a special body like the suggested National Entrepreneurship Council to nurture, guide and develop small businesses in Sri Lanka. There are many examples in the world to follow to build an entrepreneurship culture.

Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!

Excerpt from:

Driving an entrepreneurship culture | Print Edition - The Sunday ... - The Sunday Times Sri Lanka

NAIROBI, Kenya, Nov 19 The National Transport and Safety Authority (NTSA) has embarked on a countrywide road safety sensitization exercise as Kenyans head to the festive season.

The authority is undertaking the exercise with key stakeholders as the World Day of Remembrance for Road Traffic Victims 2023 is observed globally.

According to NTSA Director General George Njao, everyone should exercise caution on the roads by observing all the traffic regulations to curb the rising number of accidents and fatalities on Kenyan roads.

How many roads are paved in our country? How many people are we losing every other day if we will not do adjudicating continue for road safety as required? he posed.

The theme of this years day is Remember, Support, Act paying tribute to lives lost in road traffic crashes, acknowledging the efforts of emergency services and advocating for safe roads.

National Authority for the Campaign Against Alcohol and Drug Abuse (NACADA) CEO Anthony Omerikwa cited Alcohol and drug abuse as one of the key contributors of road carnage in the country urging motorists to avoid operating vehicles while inebriated.

Stay away from alcohol and drug use to promote safety on our roads. We shall work closely with NTSA to draw the publics attention to road crashes, consequences and measures to prevent them, he said.

Various victims of road accidents recounted their experiences of survival and overcoming challenges after road crashes.

If you see me standing before you it is a miracle. My hip was completely removed and I survive with an artificial hip. It has taken a lot of time and resources and maybe your family may end up selling everything. The moment you start your ignition, please, your safety starts with you, said Simon Mwangi a road crash victim.

Ruth Ndungu a Nakuru based survivor called the public to get first aid training so that they can be able to help and take care of victims in case of a tragedy occurring.

The pain is too much. You are working then all of a sudden you cannot and everybody has to take care of you, spending everything that you have just to get well. Do not be in a hurry because you will still arrive, she said.

In October, NTSA unveiled the National Road Safety Action Plan (2023- 2027) which aims to achieve at least a 50% reduction in deaths and severe injuries in designated high-risk demonstration corridors and urban areas.

Mohamed Daghar, the Permanent Secretary in the state Department of Transport, emphasized the urgent need for coordinated road safety efforts involving both national and county governments to enhance the safety of Kenyan roads.

We cannot be losing over 4000 people every year, and that is just part of it. We have people with permanent disabilities, we create widows and orphans. We collapse an entire household because the breadwinner is lost. The net effect of this road safety challenge is beyond understanding, he noted.

Road safety remains a critical issue globally, with the World Health Organization (WHO) estimating that over 1.35 million people die annually due to road traffic accidents, making them the leading cause of death among individuals aged 5-29 years and posing significant socio-economic burdens on societies worldwide.

Read more here:

NTSA embarks on Road safety sensitisation drives as heavy rains ... - Capital FM Kenya