Even with the economy contracting, average earnings in the UK were rising by 5.5% a year in 1992 -- or 3.5 percentage points above what is needed to stand still in terms of living standards. Economies now consist of a magic circle of people from all walks of life who are in reasonably secure employment, buttressed by pension schemes, and who regularly ward themselves pay increases well above the rate of inflation. Outside this are the long-term unemployed and an increasing army of temporary and part-time workers who can be easily laid off, plus a new underclass of people who have never had a job in their lives. Unions are as much to blame as management for this outcome.