Where are the good jobs going to come from?
In response to the terrible news that BAE systems is cutting 3,000 jobs across the country, with many more set to be lost in associated supply chains, the local Conservative MP (who I am fairly sure was Mark Menzies, but wasn’t quite awake enough to catch) hit the airwaves this morning emphasising the importance of creating good jobs to replace the skilled employment opportunities that we now know are set to be lost, and asking for a mini-enterprise zone to be set up in the local area.
Leaving aside the fact that there is little evidence that enterprise zones will work (and that the Government’s own job creation targets for them are extremely low), his sentiments will be shared by many – the importance for our future economic capacity, and for the future livelihoods of BAE’s workers, of enabling those facing redundancy to move back not simply into employment, but employment which makes best use of their skills and pays them a fair wage, is self-evident.
But the facts are stark. Despite much talk about re-balancing manufacturing has still failed to buck the trend of the last 30 years and continues to show net job losses rather than gains, with employment levels down 11,000 over the last quarter and by around 1.5 million over the last decade. Furthermore, work from IPPR has highlighted that only the most optimistic of forecasters anticipate any rise at all in manufacturing employment over the years ahead with higher output forecasts (for example from the EEF) accompanied by a recognition that employment levels are likely to continue to fall.
There are multiple reasons for this likely trend, but key is that the high-tech manufacturing sectors where the UK may be able to steal the march on competitors is less employment intensive than traditional forms of manufacturing employment and that emerging economies with low labour costs now have the comparative advantage when it comes to manufacturing many goods we previously produced. While significant state support for manufacturing, in the form of smart industrial policy and increased access to investment capital, has clear potential to help the key point is that even if the sector recovers some of its lost ground, the likelihood (without extensive policy change) of manufacturing employment even returning to levels seen in the early 2000s is, in the assessments of many forecasters, remote.
Why are these jobs so important? As well as ensuring a diverse balance of employment opportunities and industries within the UK’s economy, manufacturing jobs generally pay closer to median (and often well above) than minimum wages as well as having lower pay differentials within companies than is the case in many other sectors.
Good wages boost demand in local economies and good companies invest more, provide workers with access to training, are far more likely to offer well-paid apprenticeships and boost employment levels more widely through their supply chains. Good work is also good for health (pdf): bad work is not. And more widely, with the number of jobs where workers are paid at less than a third of the median having doubled over the last 20 years, and growing wage inequalities and concentrations of wealth acknowledged (in research published by the IMF) to have contributed to the financial crisis, our economy needs more good jobs more than ever before.
But if current trends suggest manufacturing is unlikely to see significant jobs growth, and the public sector (another source of middle income skilled employment for many over the last decade) in retrenchment, where are the good jobs going to come from? IPPR conclude that if current trends persist the employment recovery will be slow and that “what jobs growth does occur, therefore, is likely to be found in non-financial business services and in other parts of the service sector, such as adult social care”. Some of these jobs will be good, many will not. And on current projections there won’t be anywhere near enough of them to go around.
The potential consequences for working people are clear. As analysis undertaken by the Work Foundation suggests, the stark truth is that the reality for many workers affected by today’s devastating announcements may, unless we can achieve deep -seated change in the structure of our labour market, be challenging. Tracking workers following the closure of the MG Rover plant at Longbridge, the Work Foundation study found that: “many of the ex-MG Rover workers are now in jobs that pay less, and that are worse than their jobs at the MG Rover plant…The evidence suggests that this will have an adverse impact on general well-being as well as physical and mental health.”
So while local Conservative MPs, and Labour politicians, bemoan the lack of decent work, no one yet has a plan for how on earth to get more of it. Enabling jobs growth in sectors which generate better jobs, and acting to make existing work better, will need radical solutions: a comprehensive and significant industrial strategy providing state support for the sectors where we know better jobs can be created, active labour market programmes which learn from the best in the world, stronger requirements upon employers to provide training and to pay fairly, significant corporate governance reforms to secure fairer pay distributions within firms, better rights at work and yes, stronger unions.
At a time of squeezed public finances when unemployment is above 2.5 million and rising this may seem fantastical. But if we don’t at least honestly spell out the scale of the challenge, as well as the potential economic returns of significant labour market change, we will have even less chance of achieving it.