One of the big challenges of our time is to provide work for all those who need it, work which is useful, fulfilling and which pays enough to live on. And although the British economy is creating around half a million jobs (net) a year, many of them do not satisfy those simple criterion.
The need for good quality jobs will increase as the population increases and working careers get longer, yet hardly anyone is thinking about where these jobs are to come from. Government departments, unions and think-tanks tend to concentrate on where jobs have been created in the past or predicting where they may come in the future, or on skills training or how to improve conditions for those already in work. The private sector seems to regard jobs as a by-product, a necessary evil in the process of making a profit, and in the public sector the government wants to cut as many jobs as possible to save tax-payers’ money. No one is actively looking at areas where new and worthwhile jobs can be created and how to do it.
Let me be bold and suggest six sectors where this might be done, in what I call the “infinite industries” ie where there is no limit to the amount of production that can be done: education, health, energy, environment, sport and the arts.
Not only are these “industries” infinite, they are labour-intensive, easy on the environment, and they provide the kinds of jobs people really want to do…learn and teach, care for the ill and vulnerable, work out-doors, physical work, creative work.
My plan is for the government to pump-prime jobs in these industries by investing in them much more than it does at present – ending “austerity” in education and health and subsidising projects in the other areas. Yes, this would mean more taxation and/or more borrowing (and there is plenty of room for both when compared with other European countries) but it would be a better investment in our future than the current industrial policy of subsidies to the car industry and building warships. In the long-run, of course, more people would be in employment, paying taxes and coming off welfare.
Traditional economists will tell you that such a policy would lead to a drastic fall in “productivity” and “growth”. This is probably true, as far as it goes, but actually, these two measures are false pictures of our economy, more suited to a time when Britain was a manufacturing country. Now, manufacturing only accounts for 10 per cent of the economy, 80 per cent of our GDP comes from “services” and how can you measure productivity and growth in education or health ?
Finally, I think Liberal Democrats are well placed to adopt this job-creation agenda. We believe in a real mixed economy, a 50/50 partnership between the public and private sectors. We believe in decentralisation, and local initiatives by councils or voluntary organisations are perhaps best able to develop job creation projects. And we believe each individual has the right to a decent job which fulfils his or her potential, which pays enough to buy a home and raise a family and which brings a sense of satisfaction and even happiness.
For full details e-mail me on [email protected] for a copy of my pamphlet “Good Work – How to create worthwhile jobs.”
* John Knox is a member of Edinburgh South Liberal Democrats, a retired journalist and a recent council candidate.
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27 Comments
John,
this is an excellent piece that I would wholly endorse. I do think adult education and skills training is a necessary and desirable adjunct to such a program. You might find the concept of Job guarantees and employer of last resort of interest. The argument is that so long as there are unused labour resources in the economy (unemployed) there is no real cost to employing them i.e. no need for taxation or borrowing increases to productively utilise what is otherwise a wasted economic resource.
This article discusses job guarantees https://www.libdemvoice.org/opinion-we-can-conquer-unemployment-38960.html and this short video link courtesy of Peter Martin on another thread explains the monetary concepts https://youtu.be/4Ap0ymmVlwA.
John
As with Joe , a good article in it’s intention.
We are the party that must do this. We , to quote the old campaign that so many did not like , of all parties, have a heart and a head , for these things.
I think it means we get both the failings of the capitalist system, and the successes , both meaning we can conceive of a better route for our economy , but not motivated by a misunderstanding of it.
I have the need for investment in exciting projects in the creative industry, no bank will touch , despite my efforts, because they are blinkered. Under most circumstances they would , but not as a result of the credit crunch, we have gone from bad to worse, no risk is the norm, now.
I have a west end theatre in the pipeline as a try out venue to workshop and showcase , but no investment despite it, even a few thousand, because of no investors known to me , and me to them, and no bank interested at all.
We are in need of JFK or FDR !
A good article John, but I have a few questions. Firstly, I note that you don’t include science and technology as one of your sectors. Is that because you see it as underpinning all the other sectors you mention or because you don’t see it as a major source of new jobs? I’d suggest that we do need to think about how we encourage more people to get into science and the careers it can potentially offer.
Secondly, if healthcare is to be a source of new jobs, a significant part of that will be in care for the elderly, given our ageing population. Yet many care jobs are fairly low paid and care providers struggle to find staff, which is why so many people from elsewhere in the EU and other parts of the world are employed in the sector, a situation which Brexit will make worse. However, if care staff get paid more, that could hit some care providers who operate on tight margins. The only solution would be more money from either users or the state. If it’s the state, we can’t just wish away the significant debt and deficits facing the public sector, while many elderly people feel they’ve paid in all their lives and are resistant to contributing more. Saying we want to create high quality jobs is fine, but there will be the need for some hard choices which will upset some people.
‘ ie where there is no limit to the amount of production that can be done: education, health, energy, environment, sport and the arts.’
Commonly called increasing the size of the public sector.
Thank you John. A nicely written exposition. Do I understand correctly that you are arguing in essence that government should employ lots more teachers and health sector employees, based on peoole’s need for a fulfilling job rather than the services those people provide, paid for by both taxation and more government borrowing ? Have I got the gist of your argument ?
Moving money from (pointless) war preparations to expanding health and education seems to be the underlying theme here if I am reading it right. Certainly car production is heading towards 100 percent robots so from a job perspective not much left in it for humans other than the design side, which is the most interesting bit. I do worry it is a bit vague on specifics so that voters can not get their head around what is on offer.
The idea that there is plenty of borrowing left in the economy is not one that the party leader has been chanting when attacking Labour for attempting to bankrupt the country. On taxation, in the last election Labour went in with an apparent 50k bribe for students and their parents whilst the LibDems went in with an offer to increase taxes for everyone. And the result was? Not saying I am against a small rise in personal taxation just that it is not the way to power.
There are fantastical opportunities for people out there with the rise of the internet and fast changing technologies such as 3D printing. I could, for instance, put a small manufacturing plant in my garage and sell stuff around the world direct to consumers on eBay. Artists now have a direct sales channel to their audience… it goes on and on, opportunities abound and probably the best thing the government can do is get out of the way, collect the taxes and spend them where most needed… ok, health and education. But then why try to wrap it up as a 50/50 public/private investment when it is really just increased public expenditure… and will be seen as such by the public.
Its a good article and a good starting point for a job creation strategy. However I feel there are a couple of omissions some of which have already been mentioned by other members in the feed. Digital start ups and investment, disability – software, aids and disability spaces and green affordable accessible transport.
@ John (7.52am)
It’s not just about increasing the size of the public sector. In all of the areas that John Knox mentions there is significant private sector involvement (eg training providers, care homes, energy companies). We certainly aren’t going to get the jobs we need if we only look at increasing the public sector.
Sorry, meant John (7.24am).
Lorenzo
It sounds as though you need equity finance where an investor is prepared to share the risk with you and shares are issued in proportion to the amount of your own money you put in.
Banks have their depositors to consider and should only lend for relatively low risk ventures which already have sufficient equity funding.
Bill Fowler
On taxation, in the last election Labour went in with an apparent 50k bribe for students and their parents whilst the LibDems went in with an offer to increase taxes for everyone. And the result was?
Jeremy Corbyn now coming out and saying “Duh, I didn’t know how much this would cost, and now I’ve found out, it can’t be done”.
This is just about the most basic element of politics – balancing what you want to do in government with how you are going to pay for it. Corbyn’s Labour did well giving the impression if in government they would do all sort of extra things, abolishing student loans being one of the main things, and that it could all be paid for in a way that no-one much would notice.
It really doesn’t much to work out approximately how much it would cost to pay off existing student loans. Not the detailed amount, just a general idea – yes, that’s about £100 billion pounds. It doesn’t require much to get a general idea of how much tax needs to be raised to pay that. If one is running an election campaign based on this sort of thing, this is what one should be doing. It is absolutely shocking that Corbyn now comes out and says he hadn’t a clue.
The issue is that if you aren’t willing to pay for it through taxes, you will end up having to pay for it in some other way. Tuition fees show this. We needed to make clear that the loans system was not our ideal, but a compromise that had to be put in because the Conservatives would not have agreed to the tax rises necessary to continue subsidising universities.
People voted in a Conservative government again in 2017. And now we’ve found out one thing they have to do to keep taxes down – raise the retirement age.
On the job creation issue, one might note that if one is paying out benefits to people, wouldn’t it be better just to pay them wages so you don’t have to pay benefits? And how much of those wages is going to come back in taxes anyway?
We need a serious numerate discussion on things like this. Tim Farron’s denunciation of the Conservative’s serious suggestion on how to pay for social care for the elderly as “dementia tax” was precisely the opposite of that. As I said so at the time.
Tuition fees. I have yet to hear any politician explain how Higher Education will be funded in the coming decades. The current system seems to be based on a contribution from the graduate but no-one has any idea how much that graduate will earn in the future. The amount might vary wildly. And after 30 years it gets written off anyway. But in 30 years the average graduate will be in their 50s and for many people that is peak earning power. So we have no idea under the current system how much will have to come from taxes in order to supplement what the graduate will or won’t pay back. Maybe Corbyn does not know how much HE will cost to fund but then neither did Tim Farron nor Theresa May. It might just be more simple and certain to go back to the system where the tuition fees were paid by the state or the local authority at the time they accrued. It is probably a lot more accurate to work out how much the state will have to borrow to do this and how much interest the state will pay in coming decades than to work out how much a graduate will pay back over 30 years. Let’s face it, most current politicians got their HE paid for in this way and I never heard any of them suggest a loans system at the time.
Services include sectors such as advertising or selling cars, doing research, persuading potential customers of the merits of electric or hybrid cars and vans, arranging the timely and reliable supply of components and spare parts, arranging finance for manufacturers, retailers and customers.
@Ed Shepherd
You have put your finger on the problem with tuition fees. It is only in 30 years time that whoever is paying tax then, will know how much extra tax they have to pay to write off unpaid tuition fee debts from today. Yet because it is in the form of a loan, it doesn’t get added to the Government’s debt until it is written off. What we are doing is saddling our children and grandchildren with debt because we are living beyond our means; we are funding 50% of school-leavers to go to University and pretending that it doesn’t cost anything because either the loans will be repaid or written off and in the latter case it is the responsibility of the Government in 30 years time – this Government refuses to take any responsibility for the outcome.
Bill le Breton in another thread: https://www.libdemvoice.org/im-proud-to-be-a-be-a-lib-dem-newbie-54944.html#comment-449612 asks what will happen if graduate salaries are lower than assumed by IFS. The counterpart to his point that it will cost less to write off student debt now is that student debt allowed to grow for another 30 years will cost the taxpayers far more to write off, because a higher proportion of the debt will be unpaid.
At the very least, the notional part of student loans that is not expected to be repaid should be added to the Government debt; it might make politicians realise the costs that they are incurring.
@Lorenzo Cherin
“I have the need for investment in exciting projects in the creative industry, no bank will touch , despite my efforts, because they are blinkered. Under most circumstances they would , but not as a result of the credit crunch, we have gone from bad to worse, no risk is the norm, now.
I have a west end theatre in the pipeline as a try out venue to workshop and showcase , but no investment despite it, even a few thousand, because of no investors known to me , and me to them, and no bank interested at all. ”
Have you tried the peer-to-peer lending sector?
Thank you to David Evershed and Nonconformistradical
The areas you both mention are as yet untapped, but it is an odd situation, I really need a few thousand , less than five, would do, up to ten, better, but that sort of sum , as development money , even on a profit share basis, ie you would get back money if, the project makes money.
I need philanthropy or sponsorship, publicity for those good enough and sensible , too , to be such.
I have projects with name professionals already involved , but stalled , as cannot do the sort of professional development needed in the early stages, that requires money I do not have , as a result of disability issues from a car accident that nearly killed my wife, and a climb back , not complete , from financial difficulty.
You two , your contributions here very welcome.
The Labour Party flirted with the idea of a Job Guarantee in the 2015 election, but dropped it this time.
It’s something that Lib Dems could perhaps take a look at and pick up on. It would be well worth doing a pilot scheme starting in areas of high unemployment with young people so that the overall economics could be assessed. Surely its better to pay a little more and get something for your money than pay the bare minimum and get nothing. The extra money in pay packets will very likely come back in taxes very quickly in any case. Whereas if we give money to the wealthy in tax breaks it will likely just end up in their bank accounts and do nothing for the economy.
The work would have to be for the public purpose. I’m sure every local council would have a long list of jobs they’d like to see done if only they had the money.
A job guarantee would also break the cycle of unemployment leading to unemployability. It would give younger people a sense of hope, and help keep them away from drugs and crime.
@ Matthew Huntbach,
“…..if one is paying out benefits to people, wouldn’t it be better just to pay them wages so you don’t have to pay benefits? And how much of those wages is going to come back in taxes anyway? …….We need a serious numerate discussion on things like this. ”
This is a point that I’ve been trying to get across for some time. We can’t multiply the average salary of a nurse by the number of nurses we’d like to recruit and then, on the back of envelope calculate that would cost, say, 1p, in income tax.
Those nurses will pay tax and NI. They’ll spend money in the shops. VAT revenue will rise. There’s a strong multiplier effect. If the Govt raises income tax by 1p then we’ll all have less money to spend so VAT and other revenues will fall. The economy will become more stagnated than it is. So the Govt may then decide it doesn’t have the money to recruit the nurses after all!
These things are never that simple. Politicians like to claim their policies are fully costed. I very much doubt that. Unless they take into account the inevitable wider effects on the economy of their proposals, they cannot possibly be.
Unfortunately this can only be properly exercised by planned migration which is not a policy the Lib Dems espouse.
As for the ideas yes of course it’s great – however, there are jobs out there that need doing it’s matching people up with those jobs. You could get 200,000 off of unemployment benefit within six weeks it just needs a creative radical look at JSA and the role of JCP.
The number of 16-24 olds that may take-up the offer of guaranteed employment is estimated at around 300,000 based on an assessment of the CIPS statistics at http://www.cipd.co.uk/publicpolicy/_work-audit0311.htm. Hourly minimum wage rates vary as follows:
• £7.20 – the main rate for workers aged 21 and over
• £5.55 – the 18-20 rate
• £4.05 – the 16-17 rate for workers above school leaving age but under 18
• £3.50 – the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship
As an approximation of the initial direct costs of a guaranteed youth job scheme I would suggest a figure of £2.5 billion in direct wage and support costs as a reasonable estimate. Using a commonly applied multiplier of 1.5 for the effects of a fiscal stimulus we can expect an increase in GDP of £3.75 billion as result. The tax take of around 30% of this increase in GDP will amount to £1.15 billion, leaving a net cost to the exchequer of £1.6 billion.
Although, in public finances these days 1.6 billion is referred to as a rounding error, I would not advocate any unfunded stimulus measures until the structural deficit is well and truly under control.
@ Joseph,
“….until the structural deficit is well and truly under control….”
I’ve read quite a bit about the “structural deficit” but I must admit I’ve never been quite able to figure out what it is! The actual deficit is simple enough. It’s just the difference between what the government spends and what it gets back in taxation. Presumably the structural deficit must be quite a bit larger. If it were smaller I’m guessing those who currently like using the term would want to keep quiet about it!
So how much larger? 10% , 20%? How is it calculated? And its always out of control! But when was it ever in control?
Peter Martin,
it is that part of the actual deficit that exceeds the level at which an inflationary spiral begins to take hold, as in Venezuela when deficit spending continued regardless as oil prices plummeted and public revenues with them. In simple terms spending beyond the ability of the state to generate income from its natural resources, infrastructure, capital and labour force – hence the term structural as against cyclical that refers to temporary or reversible oscillations in the business cycle.
Joseph,
I think we’d both agree that if total spending in the economy exceeded its capacity to deliver real goods and services we would generate too much inflation. There has to be a rationing mechanism and when spending (private and well as government) is too high, naturally that’s what’s we get.
But are we anywhere near that at present? Up until 2008 we had steady growth but since then the economy has stagnated. We can argue about whether GDP has increased or fallen since then. We can choose to measure GDP in pounds or dollars , or discuss GDP per capita or total GDP to give us closer to the answer we want. So that’s never very productive.
Whatever, we can’t have an excess demand problem at the moment. If so, why would the Government have reduced interest rates last year at a time when the pound was falling? Surely the correct thing to do, on both counts, would have been to raise them? Interest rates were lowered to encourage us all to borrow and spend more. Somehow the neoliberal thinking in the Government, and which spills over into other parties too, is that borrowing for private sector spending is virtuous but it is a cardinal sin for government.
I would argue that we don’t have a structural deficit. In any case we still need some objective method of calculating what it actually means without bringing Venezuala in as a factor to be sure we aren’t talking past each other on that point. Our deficit at the moment seems high but that is almost entirely a reflection of the need for Government to replenish money lost to the economy to cover the trade deficit. Fix that and the Government’s deficit (structural or otherwise) will naturally fall too.
Peter,
we have known since Adam Smith that the wealth of nations is determined by the level of trade. The greater the specialisation of labour and innovation, the greater the intensity of exchange of goods and services and the greater the wealth of the community.
Indicators of overheating in the economy are bubbles in property and the financial markets and high levels of consumer and mortgage debt relative to income. Problems start to arise when bubbles burst and consumer spending can no longer be maintained with increasing levels of consumer debt.
Structural impediments to economic growth can include lack of skilled labour in the right places, unequal distribution of wealth, weak transport and communications infrastructure, under-investment leading to lack of capacity in production and service facilities, uncompetitive exchange rates, excessive bureaucracy or regulation. poor governance, corruption and weak institutions.
Fiscal and/or monetary policy can smooth cyclical fluctuations but not overcome structural weaknesses in the economy.
I would agree that isolating the components of a public sector deficit between cyclical and structural components is not beset with difficulties. Typically, the rate of unemployment is used as a proxy e.g. when employment is at or below 5% the economy might be considered to be operating at full capacity on the basis that there is always a % of the labour force between jobs or lacking in sufficient employment skills to enter the workforce.
The trade deficit is high by historic standards, but productivity and wages are stagnant. We already have high inflation in housing costs and as commodity prices increase we may see rising inflation in food and basic consumer goods. I would agree that interest rates will need to rise, but that will strengthen the pound and potentially exacerbate the trade deficit.
Just to cheer things up, the last crash in 2008 was not a proper UK crash because the government intervened with massive fiscal stimulus, avoiding the immediate need for severe cuts – Spain, Portugal and Greece for instance had a proper crash and are mostly poised for recovery, be it a long and hard road. Our mild austerity by comparison has managed to double the debt and failed to balance the books. History shows that any time you go against the Market that it ends up in disaster…
Worse yet, the cyclical nature of markets suggests that 20 years after its crash, Asia is just about ready for another crash. The signs will be people saying that it can never happen again and a sharp uptick in their stockmarket which will bring in the fools.
Where does that leave the UK with hopelessly inflated property, a benefits and pension system that can’t be funded, warring factions between parties and inside parties, and just as we are about to make an uncertain exit from Europe?
@ Bill,
It’s not a very optimistic view of human society if you think we need to have economic crashes every so often. Socialists would argue that this is all the fault of greedy capitalists of course.
It needn’t be like that if only we better understood the nature of our own economy. It’s not that difficult. For example, your comment:
“Our mild austerity by comparison has managed to double the debt and failed to balance the books”
Indicates that you are concerned about “the debt”. Presumably you mean Government debt? But before you over worry about this, just consider that in accountancy terms for every asset there has to be a liability. If you have a £10 note in your wallet you have the asset and the BoE (which is really the Government) has the liability. Similarly with National Savings certificate, Gilts, Premium bonds etc. Everything has to sum to zero so if we have positive numbers, someone, and ultimately this has to be government has to hold the negative numbers.
The UK is a net importer. So someone in the UK has to borrow to cover the import bill. Ultimately that has to be government. It’s just not possible for it to “balance the books”. It needs to net spend money into the economy to keep it moving.
Economic policy in the last couple of decades has simply been about shifting the debt burden from Government to the private sector. It’s the level of private debt that you should be concerned about.
Thank you everyone for your comments. I’m glad my article on “quality jobs” created a good discussion. I hope we can be the party that brings new and courageous thinking to this important issue.
Bernard Salman is right to point out that I should have included “science and technology” in my list of new and infinite industries we ought to be encouraging. And Diane Reddell has added “green transport”. And everyone is right in supposing that I am arguing that job creation needs a helping hand from government – even if the public sector involvement rises to 50 per cent of the economy. That still leaves a lot in the hands of the private sector and government should always try to hand over to the private sector as soon as new industries take off.
As to the more esoteric discussions on job guarantees, or student fees, or costing of political programmes or Adam Smith type economic models, I’m going to leave that to the experts.
All I’m pleading for is that our economic policy should put jobs – real quality jobs – at the top of its agenda. And yes make the hard choices necessary to achieve that.