ISSUE 26 Lancaster University Management School | the place to be FIFTYFOUR DEGREES Hedge funds and market manipulation 22What makes work decent? 6Strategy vs geopolitics 14 Research that leaves a footprint on a constantly moving business world CHANGE IS COMING
Advanced Coaching and Mentoring: Principles and Practice Next Session: September 21, 2026 Build the confidence and advanced skills to coach and mentor others to achieve their full potential, and drive real organisational impact.
FIFTY FOUR DEGREES | 3 Ice Cream Against Authoritarianism Lewis Nicholas examines how and why global corporations take stances on contentious issues and engage in corporate political activism. 6 In this issue... 34 Starting Out is Never Easy The Work Foundation’s Emelia Williams summarises work looking at how to help more young people into work. 22 What Makes a Job Decent? Dr Ophelia Chidgey reveals the signs of labour exploitation that we might not always notice, and how they can be stopped. 14 Hedging Your Bets Do hedge funds manipulate markets? Professor Olga Kolokolova shows how changes in regulation and oversight may have changed practices. 30 Diversity in Defence: Women in Cybersecurity Professor Niki Panteli and Dr Boineelo Nthubu look at issues of gender equality in cybersecurity, and how to improve the situation. Legitimising the EV market How has the electric vehicle market made charging less of a worry and more of a part of daily life? Dr Nicole Bulawa explains. Your Beliefs Matter What you think about the economy can affect what happens to it. Professor Lorenza Rossi discusses how. 18 10 The Warhammer Effect It is a cultural phenomenon. But how did it get there? Dr Mike Ryder talks us through the rise of Games Workshop. 38 When Work is Built Around Life Money or health? Drs Sharmin Nahar and Muntasir Alam show the benefits of going self-employed. 42 26 Building Strategy in a Fragmented World Dr Ziad Elshan explains why businesses need to adapt and anticipate in a world where politics can change in an instant. 46 How Do You End Forced Labour for Two Million People? Uzbekistan’s cotton industry has transformed in the last decade. Farmon Asadov reveals how the country ended boycotts and forced labour.
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Foreword Welcome to Issue 26 of Fifty Four Degrees. Professor Claire Leitch Dean, Lancaster University Management School FIFTY FOUR DEGREES | 5 Sometimes you shape the world around you; sometimes it shapes you. As a leading international management school, we endeavour to stimulate change. Our researchers work in fields that touch upon businesses the world over, and in areas that affect billions of people. Our cutting-edge work on sustainability, social justice, innovation, health, and technology tackles issues at the forefront of modern society. We do not shy away from difficult discussions, provide potential pathways forward that others may never have considered, and go to the heart of organisations to ensure we learn from and impact each other. But no matter how forward-thinking we are, sometimes things will happen far beyond our control. Our researchers in sustainability have certainly encountered that in the last two years, as political shifts in the USA, in particular, have made that topic more contentious than it was previously. The same can be said for those in our School who work on the area of refugees, those who consider trade arrangements at home and abroad, and those investigating gender and race issues. Changes on a global scale, set in motion by individuals or political movements, force us all to think again. Just a few months ago, a new war in Western Asia did just that. Likewise, the Russian invasion of Ukraine, Brexit, and many other examples. In this latest Fifty Four Degrees, we can see that Ziad Elsahn understands all of this. His work looks at how geopolitics can affect business operations on many levels, and what they can do to avoid falling victim to shifting winds. Whether it relates to supply chains, AI, international customers, or partnerships, Ziad shows us what can happen when a political shift directly impacts your organisation. One of our PhD researchers, Lewis Nicholas, looks at how companies deal with politics from a slightly different angle. His research focuses on corporate political activism. This is where businesses take a stance on contentious issues – be that race relations, gender, government or even the environment – in the public realm. Lewis’s insights on the actions of the likes of Ben & Jerry’s are intriguing, and show that there are organisations out there who want to shape politics, not just sit back and go where the currents take them. There is no suggestion those businesses would act dishonestly to achieve their wider goals, which cannot be said of some hedge fund managers in the early 21st century. Olga Kolokolova shows how they managed to manipulate markets back then, and what has changed to mean they no longer do so. It is an engaging look into an area few of us will ever have direct contact with – unless we win the lottery! All of us feel the effects of inflation, however, and Lorenza Rossi’s piece shows how our beliefs about what the economy is doing and is going to do can have an impact. We might think only governments, economies, and possibly some of the biggest companies in the world can have any meaningful effect on inflation, but Lorenza’s research reveals that is not the case. While we may sometimes be powerless to affect things, it seems we can equally on occasion have an influence without realising it. There is much more for us to consider throughout this edition as well. From the qualities to decent work, to the rise of electric cars, the problem of a lack of diversity in the cybersecurity sector, and the challenges facing young people as they try to get their first jobs. There is even space to look at the rise of Games Workshop and what its example can teach us, the trend of entrepreneurs putting lifestyle before work, and the transformation of the Uzbek cotton industry over the last decade. The last is a fascinating study on how a whole country changed a system that many assumed was there to stay, moving away from forced labour and international isolation to become a world leader. They took the bull by the horns and made the change themselves, rather than waiting for someone to do it for them. Subscribe online at lancaster.ac.uk/fiftyfour SUBSCRIBE
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FIFTY FOUR DEGREES | 7 In a world where politics can change in an instant, how do you ensure your business is ready? Dr Ziad Elsahn explains the need to adapt and anticipate in order to safeguard operations against disruption. Building Strategy in a Fragmented World
Consider two very different strategic decisions. One involves an Artificial Intelligence (AI) company forced to suspend access to key models because of a US exportcontrol directive. The other involves a global technology company shifting part of its production network from China to India as tariffs and geopolitical tensions reshape the economics of manufacturing. At first glance, these may look like isolated episodes. However, they point to the same broader issue: firms must compete not only in markets, but also in political environments shaped by regulation, trade policy, and geopolitical rivalry. Dealing with such forces, whether through managing government relations, lobbying for change, or anticipating how political developments may alter the rules of competition, forms an important part of what is often referred to as nonmarket strategy. A PRESSING CONCERN In the current environment, characterised by rising geopolitical tensions and increasing fragmentation of the global economy, non-market strategy has become pressingly important. In his speech at Davos last January, the Canadian Prime Minister Mark Carney described the current international order as follows: “Over the past two decades, a series of crises in finance, health, energy and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.” This description reflects the direction in which many states now appear to be moving in relation to international markets. The US return to tariffs under President Donald Trump, and the geopolitical rivalry between the United States and China over semiconductors, rare earth minerals, and AI, are just some examples of how these tensions are reshaping markets and, by extension, firms’ strategic decisions. A DIFFERENT PICTURE To be clear, the relationship between business strategy and politics is hardly new. What may be different today, however, is the scale and frequency of geopolitical disruptions, and the broader range of strategic decisions they now affect. Issues once analysed primarily in commercial terms, such as which markets to prioritise, which suppliers to rely on, and which technologies to invest in and build around, now carry a more salient political dimension. For many firms in digital and technologically advanced sectors, as a case in point, strategic decisions around technological innovation and adoption are no longer driven solely by cost and performance. They are increasingly influenced by whether access to critical technologies could be disrupted or restricted by export controls, national security rules, and broader geopolitical rivalry. The recent Anthropic episode provides a useful illustration. In June 2026, Anthropic, one of the leading AI companies based in the United States, announced that the US government had issued an export-control directive requiring it “to suspend all access to Fable 5 and Mythos 5 by any foreign national, whether inside or outside the United States, including foreign national Anthropic employees.” The practical effect was that Anthropic had to disable these models for all customers in order to comply. The directive was reportedly motivated by national security concerns. 8 |
Relatedly, the US has for some time restricted Chinese access to advanced AI chips on national security grounds, while China has increasingly encouraged domestic firms to reduce dependence on US suppliers and support the development of local alternatives. CHANGING DYNAMICS The significance of these developments from a strategy perspective is that they illustrate the changing dynamics of competition in frontier technologies. For firms such as Anthropic, OpenAI, and other developers of advanced AI systems, access to critical inputs is increasingly shaped not only by markets, but also by states’ national security priorities. Their ability to develop and commercialise AI models depends on access to advanced chips and international markets, both of which are becoming subject to greater political scrutiny and regulation. The implications extend beyond the firms developing these technologies. A growing number of companies are using AI tools in their internal processes and products. An organisation that integrates a particular AI model into its processes may face changing access conditions leading to costly disruptions and adjustments. In this sense, managers need to think not only about technological dependence, but also geopolitical dependence: whether a key technology, a supplier, a client, or a platform can become unavailable because of where it is produced, or which state now regards it as strategically sensitive. GLOBAL PROCESSES A similar logic can be seen in strategic decisions around supply chain configurations and international strategy. For years, many firms designed their supply chains around efficiency and cost considerations. But in a more fragmented geopolitical environment, such efficiency can become a source of vulnerability. For example, Apple has started diversifying its production beyond China for some time, but the risk of US tariffs appears to have accelerated that process as it made the risks of geographic concentration more salient. The criteria by which firms evaluate these strategic decisions are therefore changing. Managers need to think about which locations offer greater political flexibility and which dependencies can become too risky. HOW TO ADAPT? How, then, should firms respond? The answer will necessarily vary depending on the size of the organisation, the resources it possesses, and the extent to which its industry and markets are exposed to geopolitical pressures. Smaller firms, for instance, may lack the financial, organisational, or political resources that enable large firms to build geopolitical expertise, engage with policy makers, and absorb costs that result from diversifying supply chains. But the common challenge is how to adapt their strategy process and organisational structures to a world characterised by geopolitical fragmentation. At managerial level, the current environment requires greater geopolitical awareness and knowledge. The mental models through which we see and analyse the world need to incorporate geopolitical considerations. Managers require a stronger understanding of how geopolitics, trade restrictions, industrial policy and regulatory changes may affect their firms’ markets. They need sufficient knowledge to recognise when political developments may alter the assumptions on which strategic decisions are based. At the organisational level, firms need to think carefully about their structure and the coordination between different functions. In many companies, responsibility for political issues analysis is dispersed across government relations, legal, compliance, and procurement teams. In a more fragmented world, this dispersion can become a weakness. Firms need organisational arrangements such as cross-functional teams and task forces that allow information about political developments to feed into strategic decision-making and strategy making processes. This may involve developing clearer internal processes and routines for monitoring geopolitical exposure and more systematic processes for linking political analysis to decisions on market selection and entry, sourcing, investment, partnerships, etc... In this sense, the challenge is not simply to react to geopolitical shocks as they arise, but to incorporate geopolitical analysis into the everyday practice of strategy. FIFTY FOUR DEGREES | 9 Dr Ziad Elsahn in a Senior Lecturer in Strategy in the Department of Entrepreneurship and Strategy. His research focuses on organising and strategising processes and practices in the context of internationalisation, innovation, institutional change, and sustainable transition. z.elsahn@lancaster.ac.uk
10 | Ice cream against authoritarianism:
FIFTY FOUR DEGREES | 11 How and why might global corporations take stances on contentious issues? Lewis Nicholas explains the concept of corporate political activism, and how it has evolved in recent years. Can corporate political activism save democracy?
On 28 March this year, more than 3,000 “No Kings” protests took place in the United States and other countries. An estimated eight million participants mobilised to oppose US President Donald Trump’s “authoritarian power grabs” over immigration, economic policy, and foreign military interventions. One participant warned: “What we’re living through, in the United States and around the world, has a name… Authoritarianism concentrates power in the hands of a few at the expense of everyone else’s freedom. It targets the most vulnerable first… And it does not stop there”. This warning came not from a politician or campaigner, but from ice cream company Ben & Jerry’s. NO VANILLA ACTIVISM Ben & Jerry’s involvement in the No Kings movement is an example of corporate political activism, whereby a business takes a public stance on a contentious sociopolitical issue. Once the preserve of only a handful of companies (Ben & Jerry’s among them), corporate activism has become a mainstream business practice in recent years. One prominent example is Nike’s advertisements featuring former NFL star Colin Kaepernick, advocating for racial equality. In Britain, cosmetics maker Lush recently campaigned with the Migrants’ Rights Network, using its storefronts to raise awareness and funding for migrants “in solidarity with… their fight for rights and justice”. Corporate political activism is distinctive because it entails companies engaging in political causes which are generally unrelated to their day-to-day business activities. This differentiates it from corporate lobbying, where businesses engage in the political process for purely instrumental, financial reasons (for instance, oil companies petitioning the government for looser environmental regulations). Another distinctive feature is that the political issues corporate activism engages with are contentious. They are important to the public, and divide opinion – split into passionate “for” and “against” sides. By supporting No Kings, Ben & Jerry’s took a side on the issue of Donald Trump’s presidency – on which American public opinion is polarised along party lines. Whereas businesses have traditionally sought to avoid public involvement in political controversies, “activist” businesses address controversies head-on, often drawing polarised consumer responses. CORPORATE INFLUENCE By taking stances on controversial political issues, companies can influence not only public attitudes, but governments and laws. Historically, corporate attempts to influence the democratic process have been controversial, because corporations are not democratically accountable and their leaders are not democratically elected. This raises a question regarding Ben & Jerry’s recent activism: can a business plausibly run a prodemocracy campaign? After all, corporations are not political parties. They answer to their shareholders, rather than to voting citizens. Nor are they social movements. They are designed to maximise profits, rather than serve a cause or the public interest more broadly. Ben & Jerry’s is part of the Magnum Ice Cream Company: a multi-billion-pound, multinational corporation. Perhaps Ben & Jerry’s, with left-leaning consumers in mind, publicly opposes Trump simply to sell more ice cream. From this perspective, corporate activism looks rather like corporate lobbying: a profit-seeking activity. PUBLIC ACTIONS Yet unlike lobbying, corporate activism is not conducted behind closed doors, but publicly. Its audience is not just politicians, but the public. Ben & Jerry’s even joined marchers on a “No Kings” rally in their hometown of Burlington, Vermont, carrying a banner reading “Resist Together!”. They were not trying to influence politics clandestinely, but transparently – openly communicating their values and position. Does the open, transparent character of corporate political activism mean that it is more democratically acceptable than lobbying? It is true that we can see, praise, and criticise Ben & Jerry’s’ political actions. But we cannot “vote” Ben & Jerry’s’ leadership out of office if we disagree with them. Moreover, Ben & Jerry’s’ activism 12 | trAnsfoRming toMorrow Listen to Lewis talking about his research on the Transforming Tomorrow podcast episode Corporate Political Activism:
seems to affirm the role of corporate money in politics, rather than disavow it. The company’s participation in No Kings suggests a belief that corporate money can be a tool for good in politics. It is because Ben & Jerry’s runs a profitable ice cream business, with customers worldwide, that it has the platform, global reach, and resources to effectively promote its political message. Corporate activism often entails the forceful use of corporate money to achieve political objectives. For example, companies including PayPal and Deutsche Bank pressurised the government of North Carolina to repeal an anti-trans “Bathroom Bill” by boycotting the state, causing an estimated $3.67 billion hit to the state economy. LEFT-LEANING As the examples in this article indicate, corporate political activism is dominated by stances on the left of the political spectrum. This represents somewhat of a historical reversal: big businesses have more often been pilloried by left-leaning protesters than marching alongside them, from the student protests of 1968 to the “Occupy” protests of the 2010s. The logic of this shift was summarised by Ben Cohen, co-founder of Ben & Jerry’s. Cohen argued in an interview that big businesses standing up for progressive causes represented “the most powerful force in society… using its power for the benefit of society”. Cohen’s argument reframes the role of corporate money in politics: from a corrupting influence, to a powerful tool for fighting social injustice. Cohen spent many years using his business to promote a particular concept of social justice. But he is far from the only businessperson with a vision of what is to “the benefit of society”. Elon Musk threw his social media platform, X, and his personal wealth behind Donald Trump’s election in 2024, calling it: “a fork in the road of destiny”. Musk supports some decidedly un-Ben & Jerry’s causes: government spending cuts, deregulation, and opposition to what he calls “the woke mind virus”. Various companies have sought to promote and profit from “anti-woke” sentiment following Trump’s re-election. This shows that corporate political activism need not necessarily be left-wing. BEYOND OUR INFLUENCE? When a politician effects political changes that we disagree with, our right to vote in elections provides a powerful tool for influencing them and for registering our discontent. Mandatory declarations of financial interests are meant to prevent UK Members of Parliament from voting in pursuit of personal financial gain. Our democratic procedures and institutions are imperfect, and many people are understandably dissatisfied with their current performance. But they are designed to give us a voice in how we are governed, and the ability to hold the powerful to account. When a company or corporate executive effects political changes that we disagree with, our options are limited. We lack any direct say or input into their stances. We cannot choose which causes they direct their substantial wealth towards. Although we can speak out against them, the voice of the multinational corporation tends to be louder than that of the citizen. Freedom House, a non-profit organisation advocating for democracy, warned in its 2025 report that democracies face “daunting challenges”, with political freedom in decline worldwide. Ben & Jerry’s is right that democracy is worth fighting for. But big businesses’ involvement in politics, whether through lobbying or activism, lacks democratic input and accountability. Perhaps the question should not be whether business is using its position as “the most powerful force in society” for good, but whether it is good for business to be “the most powerful force in society”. In a democracy, this role belongs to the people. FIFTY FOUR DEGREES | 13 Lewis Nicholas is a PhD researcher in the Department of Organisation, Work and Technology in Lancaster University Management School. His research investigates corporate political activism. He is supervised by Dr Kostas Amiridis and Professor Bogdan Costea. l.nicholas@lancaster.ac.uk
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FIFTY FOUR DEGREES | 15 Hedging Your Bets The hedge fund industry has been historically seen as controversial. Academic evidence in the early 21st Century suggests that hedge funds even manipulated the market. But is that still the case – and if not, why not? Professor Olga Kolokolova shows the changes that have taken place to make ‘pump and dump’ strategies less worthwhile, reducing instances of misconduct across the sector.
As an investor – even an observer – we trust that well-functioning financial markets accurately reflect the value of companies. When you put money into stocks and shares, or when your pension fund or insurance company does so for you, you want to know the price is fair. But not everyone plays by the same rules. For centuries, there has been market manipulation. In 1814, for instance, deliberately spread rumours about the death of Napoleon led to a spike in prices of government securities at the London Stock Exchange. This is now known as the Great Stock Exchange Fraud of 1814. Some people use markets to their own advantage, never mind the consequences for everyone else. Among this group of potential manipulators, our work looks at modern-day hedge funds – professional investors often seen as skilled at stock picking and market timing. Unless you have a high individual net worth and access to substantial disposable funds – or represent a big institution ready to invest, at a minimum, around £500,000 – you are unlikely to find yourself among their direct investors. But indirectly, all market participants are affected by hedge fund trading. Hedge funds are active in derivative markets, and a large fraction of all short selling – where investors ‘borrow’ shares and sell them, hoping to buy them back later for a lower price – is done by hedge funds. They tend to exploit relative mispricing of securities, potentially making markets more efficient and fairer for all. But what if they are cheating? PUMP IT UP In the 2000s, hedge funds operated in a traditionally lightly regulated area, with few reporting requirements. Those that were in place did not even apply to all funds. The industry was growing rapidly, with cash flowing in. The opportunity for manipulation was there, and it was taken. Between 2000 and 2010, as a collective, these funds engaged in a ‘pump and dump’ or ‘portfolio pumping’ strategy. This involved buying more stock of which they already have a stake on the last day of a quarter – when funds are expected to report their holdings. Their actions created artificial demand and inflated the value of the stock and, hence, the reported hedge fund portfolio. But just a day later, on the first day of the following quarter, the funds sold those exact same stocks, leading to a decline in their prices. Such trading created a ‘blip’ in stock prices, and it repeated itself quarter after quarter. The hedge funds involved gained through potentially higher investor flow – more people investing money, resulting in bigger fee payouts for fund managers as investors saw better reported performances and wanted in on the action. The practice was feasible because funds had free capital to finance the portfolio pumping. Our work looked at each individual stock traded on major US exchanges: the NYSE, AMEX and NASDAQ. At the end of each quarter, we calculated hedge fund ownership as the fraction of total shares outstanding by the company that is reported to be held by hedge funds and relate this ownership to price dynamics between the last day or a quarter and the following first day of a new quarter. The strongest pump and dump (blip) patterns could be seen for stocks with 16 |
high hedge fund ownership and low ownership of other institutions. This links the blips with hedge fund behaviour, not the actions of others. If one fund was engaging in manipulation at the end of a particular quarter, there was a strong chance it would happen in the next quarter, and the next, and so on. Funds may have needed to do it again because the only way to make up for the deficit incurred due to the return reversals they suffered on the first day of the quarter is to repeat the process. It becomes a never-ending cycle. But the practice was exposed by academics towards the end of the decade. WHAT HAPPENED NEXT? Our research looks at the patterns of portfolio pumping in the periods 20002010 and 2011-2020. While our work backs up findings that patterns of behaviour were strong before 2010, it also shows the magnitude, frequency and persistence of market manipulation decreased thereafter. The drop in the proportion of hedge funds manipulating markets is remarkable. Not only did the average level of manipulation decrease, but so did the percentage of funds often engaging in such actions. Those serial manipulators have gone. While academic – and general – exposure of practices played a role, there are other reasons for the dropoff, including regulation and scrutiny. INCREASED OVERSIGHT AND LITIGATION Since 2010, people have paid more attention to hedge funds’ actions during a quarter, and not just on the final day. External scrutiny, both from regulators and from media showing an interest in hedge fund fraud has helped to decrease manipulation. With regards to litigation, a look at international markets shows less misreporting in jurisdictions with tighter regulations. In the USA specifically, misreporting by hedge funds after they were required to register with the US Security and Exchange Commission (SEC) in 2004 declined, but increased again when those requirements were revoked in 2006. New rules in the 2011 Dodd-Frank Act requiring a majority of hedge funds to register with the regulator and granting the SEC powers to impose fines on fund managers, meant return misreporting fell once more. The pattern is clear – when the SEC has regulatory powers, the funds behave themselves much better. By examining litigation cases brought against hedge funds by the SEC, we see that in quarters with a higher number of cases there is less manipulation. More than this, we also see a reduction in pump and dump at times when there are more articles in the media about hedge fund fraud. This suggests public image plays a key role in hedge fund manager behaviour just as does the threat of regulator punishments. FREE SPENDING Another factor that correlates with the reduction in evidence of manipulation is the decrease in capital these funds have access to. It is easier to engage in manipulation if there is more capital floating around, when investors pour money into hedge funds or when borrowing is easy and cheap. If a hedge fund has less money, it cannot afford every quarter to buy extra stocks. And indeed, from 2011 onwards – when our results show a decrease in blips – there has been much less inflow of capital in the hedge fund industry, with several quarters even seeing a net outflow. SMARTER INVESTORS? The reward for manipulation is an increase in fund inflow following ‘excellent’ performance, and portfolio pumping tends to generate such performance. With the end-of-quarter reporting, investors are likely to learn this ‘positive’ news from the managers and funds themselves. It is common for managers to share their ‘wonderful’ performance with current and prospective investors, inducing more investment. Investors before 2010 rewarded such stock-manipulating hedge funds with higher inflows. Flows reacted positively to the extra return earned at the last day of a quarter. This pattern stopped in the later period, possibly after investors had learned of the dark side of the end-of-quarter results. In the absence of investors’ ‘appreciation’ of manipulated performance, the funds have little incentive to continue. NOT CLEAR-CUT Just because we are not seeing the same levels of market manipulation does not mean such actions do not exist. The scrutiny and lack of excess capital mean funds and individual investors need to find new, cleverer ways of achieving their goals. There will also be some market players who continue to manipulate prices using pump and dump or other more sophisticated strategies, but no longer with the same regularity or on the same scale. And despite increases in regulation, the hedge funds industry remains relatively lightly regulated. Ensuring proactive investigations and prosecutions of suspicious and unlawful activities of funds is of paramount importance to ensure there is no mass return to the practices of old. FIFTY FOUR DEGREES | 17 Professor Olga Kolokolva is Chair in Finance in the Department of Accounting and Finance at Lancaster University Management School. Her research spans areas including hedge funds, financial market regulation, mergers and acquisitions, and detecting fraud in financial markets. The article Do hedge funds still manipulate stock prices? by Dr Xinyu Cui, of the University of Bristol, and Professor Olga Kolokolova, of Lancaster University Management School, is published in the Journal of Corporate Finance. o.kolokolova@lancaster.ac.uk
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FIFTY FOUR DEGREES | 19 People power can shape the economy – even if the people do not mean for it to happen. Professor Lorenza Rossi presents work that shows how differing predictions on inflation patterns between experts and the public can have a negative or positive effect on the economy. Better communications might resolve the issue. YOUR BELIEFS MATTER
How do you see the state of the national economy moving forward? What are your predictions for how interest rates and inflation will behave in the months and years ahead? You may not spend every moment pondering these questions, but you will see regular news reports on the Consumer Prices Index (CPI) here in the UK, and similar mechanisms globally. They tell you how much more you are paying for goods and services than you were 12 months ago. Even if you are not consciously considering inflation, you are feeling in your pocket every time you go shopping, pay an energy bill or fill up your car with petrol. Inflation expectations play a central role in economic decisions. They influence how much money people spend, how much they save and invest. For firms, they shape wage bargaining decisions and how they set prices. While it may shape your actions, you might not think that your personal predictions matter that much in the grand scheme of things. And yet, it is precisely because beliefs affect behaviours that they matter so much. Ranks of experts in financial institutions around the world base their views on the latest data, trends, past patterns, and years of experience. But our research shows that the expectations of households when it comes to inflation are not just a reflection of the economy. They shape its path and can influence major economic dynamics such as unemployment and consumption, both positively and negatively. The extent to which this happens depends on the actual state of the economy and levels of uncertainty over inflation. For policymakers, this means that managing inflation is not only about current data, but also about guiding expectations and limiting uncertainty and disagreement among people. THE PUBLIC HAVE SPOKEN Experts and the public often interpret the economy differently. Professional forecasters rely on models, while households tend to focus on what they experience directly. One group uses a wide range of data; the sources for the other are food prices, energy bills, or rent. This matters, because these more visible factors are often more volatile than overall inflation. As a result, households may form ‘distorted’ beliefs in uncertain times. The gap between household expectations and expert forecasts can widen even when economic fundamentals do not justify it. You might see news reports of conflict in the Middle East, a pandemic emerging across the ocean, or housing bubbles bursting and economies crashing. As a result, you expect higher inflation, higher than the experts are saying will come. You change your behaviour accordingly. What happens exactly depends on the broader economic context. While it is often assumed that higher inflation expectations lead people to spend more today, there is strong evidence that households often interpret rising inflation as a signal of a worsening economic outlook, frequently associated with higher unemployment. As a result, households tend to become more cautious and reduce spending, especially on large and durable goods such as cars, kitchens, or household appliances. For example, a family might decide to postpone buying a new car or delay renovating their bathroom if they are uncertain about the future and feel that inflation is increasing because of a bad economic outlook. ONE AFFECTS ALL When many households behave this way at the same time, the effects appear at a macroeconomic level. When you see an increase in belief distortions, higher household inflation is associated with higher inflation, higher unemployment, and more disagreement about the future. This creates a situation where the economy weakens even as inflation rises. However, using US data from the Michigan Survey of Consumers and professional forecasts from the Survey of Professional Forecasters, what we 20 |
have found is that this relationship changes when interest rates are very low, at the so-called zero lower bound. In that situation, higher inflation expectations can encourage households to increase spending if there is alignment between experts and the public, because borrowing becomes cheaper in real terms. This can support economic activity and help the economy recover. At the other end of the scale, we also find that uncertainty about future inflation plays an important role. When inflation expectations are dispersed, meaning people strongly disagree on or feel unsure about the future, households tend to delay spending decisions, especially on durable goods. This can reduce the positive effect on the economy when the interest rates are low. WHEN IT MATTERS Divergences between experts and the public in their inflation belief come to the fore at times when monetary policy is constrained, such as during the Global Financial Crisis between 2007 and 2009, or the Covid-19 pandemic. During Covid, expectations of inflation increased significantly among the public. The belief distortion between households and experts was high. The public expected higher inflation that experts (and their data) predicted. While interest rates were at that zero lower bound, and expectations were high, so was uncertainty among the public. As a result, households adopted a more cautious stance, reducing spending and investment. Any potential boost from higher expectations was offset and recovery did not happen as it might have. A CHANGING PICTURE In normal times, belief distortion shocks are recessionary. Households usually reduce spending when they expect higher inflation, because they associate it with a worse economic outlook. This can raise inflation but also increase unemployment and inflation uncertainty. However, when interest rates are very low, this relationship can reverse, and higher inflation expectations associated with lower real interest rates, and thus better borrowing terms, can instead support spending. For this to happen, households need to trust the inflation outlooks of central banks and other experts. If they do not, and there is high uncertainty about future inflation, then the effect can weaken. For policymakers, the message is that it is not enough to keep inflation under control. It is also important to keep expectations stable and reduce uncertainty among the public. Transparent and credible communication is essential to anchor both expectations and uncertainty. Knowing about future policy can help households and firms feel more confident, making their decisions more stable and supporting the overall economy. FIFTY FOUR DEGREES | 21 Professor Lorenza Rossi is Chair in Macroeconomics in the Department of Economics at Lancaster University Management School. Belief Distortions and Uncertainty About Inflation is a CESifo working paper by Dr Stefano Fasani, of Lancaster University Management School; Giuseppe Pagano Giorgianni and Dr Valeria Patella, of Sapienza University of Rome; and Professor Lorenza Rossi, of Lancaster University Management School. l.rossi@lancaster.ac.uk
What makes a job decent? Labour exploitation does not always appear as we might expect. Dr Ophelia Chidgey explains work carried out between the Pentland Centre for Sustainability in Business, the UK Government Department for Business and Trade, and the Fair Work Agency that looks at how exploitative practices can be spotted earlier, before disaster strikes. 22 |
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When we picture labour exploitation, we will often imagine dramatic scenarios of criminal gangs, hidden workplaces, people physically trapped and unable to leave. Few of us visualise a last-minute rota change, dependence on an employer for accommodation, uncertainty about pay, or feeling unable to complain. But exploitation often does not begin with dramatic events. It can emerge gradually, through conditions that look ordinary enough to be unnoticed. The International Labour Organization (ILO) defines Decent Work as ‘productive work for women and men in conditions of freedom, equity, security and human dignity’. This definition outlines that decent work and exploitation are not separate concepts, they sit on a continuum, with fair, secure and dignified work at one end and severe exploitation at the other. Exploitation often emerges not through a single dramatic event, but through the gradual stacking of risks that limit workers’ choices and increase dependence. Working with the UK’s Office of the Director of Labour Market Enforcement (ODLME), the Pentland Centre for Sustainability in Business at Lancaster University brought together academics, NGOs, policymakers and practitioners to explore the drivers of labour exploitation and emerging risks. The work contributed to the evidence base underpinning the new Fair Work Agency (FWA). Within this project, we uncovered that labour exploitation manifests along a continuum and there are many issues that lead up to the extreme exploitation we may envision, such as modern slavery. Understanding these earlier warning signs is essential if exploitation is to be prevented before serious harm has occurred. THE CONTINUUM We often imagine exploitation as a line dividing acceptable work from the unacceptable. However, it is more useful to picture a slope. At one end sits decent work: fair pay, security, predictable conditions and the ability to speak up. Move a little further along and there may be unpaid overtime, insecure scheduling or wages arriving late. A little further down and you could find coercion, debt, threats or dependence on an employer. At the far end sit forced labour and severe exploitation. The journey is rarely a sudden leap from one end to the other. The significance is that early warning signs matter. If exploitation exists on this continuum, then seemingly ‘minor’ problems are not always that. Unpaid wages, unsafe conditions or the fear of questioning an employer do not automatically lead to severe exploitation, but they may shift people further along the slope and narrow the choices available to them. These are some examples of how choices are narrowed for workers: Insecure Hours: In sectors such as hospitality, there is a heavy reliance on Zero Hours Contracts and intermediary apps that promote short shifts and low-paid, flexible labour. Tied Accommodation: Often characterised by overcrowded or unsanitary accommodation where the employer controls the worker’s housing and income simultaneously. Recruitment Debt: Migrant workers frequently pay illegal fees which leads to debt bondage before they even arrive in the UK. Immigration Status: Restrictive visa schemes can tie workers to a single employer, restricting job mobility and increasing financial instability. Isolation and Lack of Transport: Workers in remote areas are often physically isolated, which hides working conditions from inspectors and prevents them accessing support networks. Fear of Losing Work: Workers often accept non-compliant work due to the lack of or fear of alternatives None of these automatically create exploitation, however together they can narrow choices and fall within the continuum of exploitation. STACKING The continuum tells us where exploitation sits, and stacking helps explain how people move along it. Multiple conditions can combine to increase risk. Workers may be able to navigate one challenge, but when several occur simultaneously, options become constrained, risks accumulate and interact. A worker may be dealing with insecure hours, dependence on employer-provided accommodation, debt, language barriers or uncertainty about their rights. None of those factors alone automatically leads to exploitation. Exploitation often develops not through one dramatic event, but through the stacking of circumstances. The combined effect is often greater 24 |
than the sum of the individual risks. Each of these risks can move a worker along the continuum, away from decent work. TOWARDS DECENT WORK Having a job is not the same as having decent work. Decent work means being able to understand your rights, question decisions without fear, receive wages on time, plan your life with some degree of certainty, and leave a job that is unsafe or unfair. Creating these conditions is not solely the responsibility of individual employers or workers. The systems surrounding work also matter. Labour markets, recruitment practices, immigration policies, housing pressures and business models all influence the choices available to workers and the risks they face. As exploitation exists on a continuum, prevention should begin before harm becomes severe. There need to be conditions in which decent work can flourish, with safer recruitment practices, better oversight of supply chains, earlier identification of risks, and a reduction of the barriers that stop workers from speaking up. The creation of the FWA in April 2026 presents an opportunity to strengthen labour market enforcement in the UK and improve coordination across agencies. To move towards decent work and prevent exploitation before it escalates, several changes have been identified: 1.Create a properly resourced Fair Work Agency The FWA, created under the Employment Rights Act, is the UK’s new labour market enforcement body, responsible for detecting, investigating and enforcing breaches of employment law. It oversees compliance with key workplace protections, including minimum wage rules, holiday pay, statutory sick pay and protections against labour exploitation, with the aim of strengthening and streamlining labour market enforcement. The effectiveness of the FWA will depend heavily on it being properly resourced, with sufficient investigatory capacity and funding to carry out proactive and meaningful enforcement. 2.Increase proactive labour inspection and enforcement capacity Our report highlights the need to move away from relying primarily on vulnerable workers to report exploitation and instead strengthen proactive labour inspection and enforcement. Recommending that at least 60% of inspections should be proactive rather than complaint-led. The UK also remains well below the ILO benchmark of one labour inspector per 10,000 workers, limiting its ability to identify risks before harms become severe. 3.Reduce forms of worker dependency Exploitation often develops where workers become heavily dependent on employers for income, accommodation or immigration status. Policies that reduce these dependencies, including safer recruitment practices, secure reporting mechanisms and greater flexibility to change employers, could help strengthen workers’ ability to exercise genuine choice. 4.Strengthen security and predictability at work Decent work requires more than simply having a job. Predictable hours, transparent contracts and reliable pay can reduce uncertainty that pushes some workers further along the continuum of exploitation. Greater stability should not be understood as an employment benefit, but as part of preventing exploitation. 5.Increase accountability across supply chains and recruitment Exploitation often becomes hidden within long chains of subcontracting, outsourcing and recruitment. Stronger accountability for labour conditions across supply chains, alongside better oversight of recruitment practices, could help shift responsibility away from individual workers and towards the wider systems in which work is organised. Preventing exploitation is not only about responding to the most extreme cases once they occur. It is about building labour markets that provide security, dignity and voice before problems escalate. RECOGNISING EARLY WARNINGS Preventing labour exploitation is not only about identifying the most extreme cases once serious harm has occurred. It requires recognising the everyday conditions that increase risk long before they may be noticed. Exploitation can emerge gradually through ordinary pressures that reduce people’s ability to exercise choice. Decent work is more than the absence of abuse. It is the presence of security, fairness and dignity at work. A decent workplace is one where people can ask questions, challenge decisions, report problems and be heard without fearing punishment. FIFTY FOUR DEGREES | 25 Dr Ophelia Chidgey is a Senior Research Associate in the Pentland Centre for Sustainability in Business. She is also a PhD graduate from the Department of Management Science in Lancaster University Management School. The report Decent Work: A Review of Evidence for Effective Prevention and Detection of Labour Exploitation, is authored by Professor Jan Bebbington, Director of the Pentland Centre for Sustainability in Business; Kilian Gaillard, formerly Assistant Economist in the Analysis and Research team at the Office of the Director of Labour Market Enforcement, and now with the Fair Work Agency; and Dr Ophelia Chidgey, of the Pentland Centre. o.chidgey1@lancaster.ac.uk
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FIFTY FOUR DEGREES | 27 If you are mulling over buying an electric vehicle but worry about when and where you can charge it, and how far you will be able to go, you are not alone. Dr Nicole Bulawa shows the ways in which building EV charging infrastructure can make the technology more legitimate. Legitimising the EV market
These days, charging your electric vehicle (EV) is something you can do while going about your everyday life, whether that is at home, during a weekly shop or while watching a film at the cinema. This is possible with more than 120,000 EV chargers available at 46,000 locations across the UK. A LONG TIME COMING The first EV chargers were already in place around the early 20th century. However, the EV charging infrastructure we know today came into place within the last 10 years where a significant step change has been seen since there were only 2,000 EV chargers in 2015. Making this transition and installing the necessary infrastructure for the EV market to become a reality requires systematic effort. Putting the physical infrastructure in place is a significant endeavour in itself. However, this is not where the work ends. People need to accept and make use of new technical developments, and this is where legitimisation comes in. Making something widely accepted requires the coordinated efforts of EV charge point manufacturers, operators, local authorities, government, and others. A research project I undertook with Katy Mason, from Salford Business School, and Frank Jacob, from ESCP Business School Berlin, showed how the EV infrastructure market has been legitimised by blending familiar aspects of the refuelling market into EV charging. BREAK THE MOULD, RESHAPE THE PAST We found that incorporating EV charging into existing infrastructures, such as petrol stations, car parks and houses, helps to legitimise it by connecting charging to familiar situations. Instead of introducing entirely new usage scenarios, EV chargers were added to situations people know how to navigate. This also has the advantage of showcasing the market’s infrastructure. Like petrol stations, EV chargers are now a common sight and part of our infrastructure landscape. EV chargers, thereby, serve as a physical market representation – seeing it makes it a reality. Physical market representations are not achieving this alone. Early-stage markets are often made more graspable via media reporting, government funding, market-specific symbols and vocabulary. For instance, car symbols were altered to include a cable, a plug and a lightning bolt to symbolise EVs. Similarly, the phrase ‘range anxiety’ was introduced to capture drivers' worries of running out of battery – a common consideration of non-EV drivers when evaluating to swap to an EV – thereby, offering a term to describe this phenomenon. Further, new technologies are legitimised by drawing parallels between them and their origin market. The design of EV chargers and the process of charging resemble refuelling petrol and diesel vehicles in a few ways. This is most evident in the way EV chargers are designed, especially for rapid and ultra-rapid chargers. They mirror fuel pumps quite closely, with towering column units whose cable must be plugged into a car. However, it is not just their appearance 28 |
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