Good jobs are not enough

by John Mills

In their essay in the October 2014 Demos Quarterly, John Hawksworth and Nick C Jones argued that ‘good jobs’ could lead to a more productive economy. While clearly, good rewarding jobs are never a bad thing, good jobs alone, especially in the service sector, will not do much, if anything, to increase productivity in the UK or to raise living standards.

The hard fact is that productivity growth in the UK has ground to a halt and there is a very simple reason why this has happened. For the first time since the start of the Industrial Revolution, we have virtually stopped investing in the type of economic activities which are capable of delivering increases in output per head of the population.

In 2013, the proportion of UK GDP devoted to gross investment, measured by the yardstick the ONS was using at the time, was barely 14 per cent. This is one of the lowest ratios in the entire world, as a survey in 2012 of 154 countries showed. The UK then ranked at number 142 – equal with El Salvador. By comparison, the world average is just under 24 per cent. In China the ratio is just over 46 per cent.

Depreciation then has to be deducted from the gross percentage. This is currently running in the UK at just under 11.5 per cent, leaving a margin of 2.5 per cent. This might allow some net investment per head of the population if the number of people living in the UK was static, but the UK population is actually growing at about 400,000 per year. With about £120,000 worth of accumulated assets per head, such as roads, schools, hospitals, machines, factories and housing, this 2.5 per cent and more is needed just to stop this accumulated capital being diluted down. The result is that there is now no net new investment per head of the population now taking place in the UK at all.

Ever since the start of the Industrial Revolution, output per head has increased every year because the labour force was provided with new capital equipment which continually increased the output that could be achieved per hour worked. The major problem, heavily exacerbated by our overvalued currency, is that there is no significant investment taking place where it is really needed in our economy to reverse this decline.

Manufacturing is in fact of key importance to the viability of our economy for three main reasons. First, it is far easier to achieve productivity increases in manufacturing industry than it is in the service sector, as all the statistics continually show. Secondly, manufacturing produces much more high-quality and high-income skilled blue-collar jobs than is the case in the rest of the economy. It also produces them with a far better geographical spread than is the case, for example, in financial services which are heavily concentrated in the South East of England. Most important of all, however, is the role that manufactured goods play in enabling us to be able to pay our way in the world – or to fail to do so as has been our lot now for many decades. The last time the UK had a trade surplus in goods was 1982 and we have not had a positive overall foreign payment balance since 1983.

The huge importance of manufacturing in making everyone in industrialised countries better off has been partly obscured by the huge falls there have been in the cost of manufactured goods – compared with services whose costs have generally tended to rise. This relative price effect makes the contribution of manufacturing to raising living standards more difficult to see, as in money terms the proportion of GDP derived from industry has trended downwards everywhere.

Manufacturing, however, is still very largely the key to economic growth and more and more applications of IT to manufacturing processes are currently providing a further boost to increases in output per head – but only where investment in this type of technology is taking place. It is happening here and there in the UK but on nothing like a sufficient scale.

This is why productivity in the UK is static. There may be a small pick-up in business investment in the UK at the moment but too much of it is going into building office blocks and opening new restaurants. Almost none of it is going into where it really needs to go – into light industry, exporting and import substitution. Of course we need to improve our infrastructure and we need investment in services, but the returns to the economy as a whole of investment in these areas is typically quite low – of the order of 10 per cent per annum.

Contrast this with the total returns achievable in manufacturing – including higher wages, better products and more tax revenues as well as increased profitability – where the total returns can easily soar to 50 per cent or more per annum. It is only investment on a big scale in this part of the economy which will deliver significant increases in output per head and thus get the economy growing again on a sustainable basis.

There is therefore no puzzle about why productivity is static in the UK. It is because we are not investing in the plant and equipment which can deliver it. Until we do, we are going to be stuck with a stagnant economy and static or falling living standards – and good jobs alone won’t solve this lack of productivity.

 

John Mills is Chairman of JML.

 

 

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Family-friendly feminism

by Belinda Brown

Thank you Holly for taking the trouble to respond to my essay. I shall do my best to reciprocate.

First of all, no I don’t think ‘having it all’ is impossible. But I do think that for those of us who do, someone else has to pay the price. And it is the armies of women and men, often migrants and certainly badly paid, who care for our sick and elderly, staff the kitchens, look after our children and clean our homes who make it possible for others to have children and households while they spend most of their life at work.

As for men, they have never ‘had it all’. The choice of having the primary and central role in the family and the privilege and authority which went with that has never been available to men. Despite the developments in workplace equality women still assume the lead role in family life belongs to them and, as evidence from the family courts (from the charity Gingerbread) will testify they have no intention of relinquishing it.

They make the rules about housework and have even started measuring who does what. As Anne-Marie Slaughter points out:

‘Women are hypocrites… we would go crazy if men treated us in the workforce the way we typically treat them at home – if a guy in the workforce assumed he was more competent than you are, and told you what to do – but that’s the way most women treat men in the household’.

When women willingly give half of all childcare to men in event of divorce, let men determine how half of household money is spent, give men at least a voice in terms of the birth or destruction of a foetus, and not simply responsibilities for child support, when fathers have automatic parental rights, and husbands equal access to family benefits, when men get an equal share of parental leave, then and only then can we start to talk about having it all for men.

Your next point is about the representation of women in the higher echelons of society standing at around 22 per cent. Maybe, as you say only 21.8 per cent of national parliamentarians are female, but feminism doesn’t necessarily help to improve that, as so often in terms of female representation in legislature it is developing countries which take the lead.

Also to the extent that we do have female representation I don’t believe that this is of any use to ordinary women, as the policies of the likes of Harriet Harman and Yvette Cooper and others tend to reflect their own exceptional experiences and attitudes rather than reflecting the experiences of womankind at large.

Finally authoritative research and analysis of this subject by Alison Wolf and others shows that equality of opportunity has been achieved. If we don’t have equality of outcome, responsibility for this should be laid at the door of women rather than men. Personally I have always assumed that these high status jobs are extremely demanding and stressful requiring a great deal of commitment and personal sacrifice. If men are more inclined to take these jobs on I support them and wish them well.

In response to what you say about ‘lad culture’, I will give you an extract from an article on ‘InsideMAN’, so you have a more holistic view of what is going on:

‘Would you rather people thought you were a dim-witted sex object, or a paedophile and a rapist? Well? It’s a crass question, of course, but it’s nonetheless one that occurred to me recently as I browsed the more lurid end of Tesco’s magazine racks and compared the titles that were on display with the on-going campaigns against Lads Mags and Page 3. For every Lads Mag targeted at men with a half-naked woman on the cover, there was a Gutter Glossie targeted at women with a prurient headline about men who are killers and rapists; yet while the former are seen by many as deeply damaging to society’s attitudes towards women, the latter don’t seem to be considered a problem for how society sees men.’

Yes, discrimination certainly does begin at school but it is discrimination against boys not girls. By the time they are five years old, boys trail girls in 11 of the 13 measures used to assess children’s educational development. At the age of 11 boys are twice as likely as girls to leave primary school unable to read and write. William Collins has shown how a strong teacher bias in favour of girls is apparent all the way through primary school and continues now up to GCSEs through the course work component. This then feeds into a subsequent gender gap both at A-levels and at university where the number of women graduates exceeds the number of male graduates by 32 per cent.

I can see that women who don’t want to have children might regard it as erroneous and misguided to assume that they do. But ‘insulting’? ‘Demeaning’? What are you trying to suggest? That those women who are more inclined to the private realm are somehow inferior to you? That those women who clean your house and look after your children are less able or intelligent? Shame on you. And you talk about feminism giving women more choice.

There is no evidence that employers discriminate against young women secretly or otherwise. Male graduates are now 60 per cent more likely to end up unemployed after graduation than female graduates. The latest data from the Higher Education Statistics Agency reveals that women in all but one subject area (agriculture) are less likely to be unemployed than men. Nor is there any pay gap; we learn from the Department of Culture Media and Sports that: ‘The full time gender pay gap is very low for those in the age groups between 18 and 39, for whom the gap now sits at or around zero.’ And in fact when it comes to part-time work, women in this age group are paid 8 per cent more than men.

You say that I said that women in the workplace damage the opportunities for men. You seem to have missed my point. The basis for the major drive to get women into the workforce is motivated by the extra tax revenue and output which will result. My point is that this does not happen. As rates of female employment go up the rate of male employment goes down. And whilst female rates of inactivity decrease, male inactivity is on the rise. What this means is that far from the scenario of growth what we really have is a pattern of replacement.

Currently we have a labour market where men are more likely to be unemployed than women. Women however are more likely to be inactive. Of those women who are inactive nearly 37 per cent are looking after home and family compared to 6.6 per cent of inactive men, ie they are already constructively engaged. Furthermore they are less likely to want jobs than men. What does it say about our system that although men are more likely to be unemployed, and women are more likely to be looking after the family, we still focus our employment drive on women? This is madness and a sad reflection of the way we view men.

You believe in creating an environment where women are socially and financially equal to men. However equality works both ways. Unless we pay equal attention to ensuring that men are equal to women, we are simply using inequality, someone’s genuine privation, as a form of social capital to get what we want. To ensure that it is really inequality we care about, and not simply self-interest, we need to pay equal attention to the issues that affect men.

So for example men are almost just as likely to be victims of partner violence as women but neither resources nor publicity go their way. Men are considerably more likely to commit suicide than women, but again this gets absolutely no attention or resources. Family courts are highly biased against men. Boys and men are overlooked when it comes to sexual exploitation. Men are much more likely to be homeless. Men are more likely to die at work, die younger, male health issues get less attention. You get the idea, the list could go on.

Do I want to drag us back to the 1950s? No. Far from it. I look forward to a future where women start advocating for others rather than for themselves, where we can look back calmly and analytically on feminism’s achievements as well as its failures and above all where feminism is a thing of the past.

 

Belinda is an Honorary Research Associate at UCL and Fellow of the Young Foundation.

 

 

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