Opinion: recession, cuts and Plan MacB – it all comes down to jobs

<em>Picture: lydiashiningbrightly</em>
Picture: lydiashiningbrightly
By John Knox

Like a tolling bell, the unemployment figures in countries across the world tell us something is wrong. It is not just that we are in a temporary recession. There is a long-term problem. Creating jobs for young people in particular is one of the great challenges facing our economic and political systems. I want to suggest three solutions built around natural resources, the “infinite industries” and localism.

Scotland’s latest unemployment figures are depressing enough at 7.5 per cent or 204,000. But they are a slight improvement on the last set of figures and they are less depressing than the numbers for the UK as a whole, 7.9 per cent or 2.5 million. Alex Salmond says this a sign that the Scottish government’s policy of postponing public sector cuts for as long as possible is working and he is calling on the chancellor George Osborne to follow his “Plan MacB”.

And if you want to see how cutting public spending at a time of recession is working, or rather not working, then visit Greece where unemployment is 12.6 per cent, or Ireland where unemployment is 13.7 per cent, or Spain where 20 per cent of the working population are hanging around market squares waiting for work.

The American Congress is finally beginning to see the sense of increasing government debt to fund a recovery programme and President Obama has announced a $447 billion jobs plan to get teachers back to work, schools and roads repaired and firms back to hiring new staff.

But all this is simply repairing the damage done to our economies by the bankers. Their antics have left the UK economy 10 per cent worse off. We hope to crawl out of this recession in the next… well it make take ten years if the coalition sticks to Plan A. But recovery plans do not address the long-term problem of providing a growing population with worthwhile, economically viable employment.

For this, I think, we need to think about expanding our economy in three directions. The first is our physical need for new sources of energy, compatible with a sustainable environment. In Scotland, the government has a plan for 100 per cent of our electricity from renewable sources by 2020, providing 130,000 jobs. Across the world, there is a huge physical need for energy, water and food, again to be balanced with protecting our atmosphere, seas, rivers, lakes and forests. There is plenty of work to be done, but it still won’t employ everybody, especially those living in our expanding cities, now half the world’s population.

So the second area where I see expansion is in what I call the “infinite industries”, where there can never be over-production. I’m talking here about science, education, health, social work, the arts and sport. All of these are labour-intensive industries and they are industries which do not easily move abroad to cheaper suppliers. They also provide attractive, worthwhile careers, the kind of work people actually want to do.

The third suggestion I have for job creation is “localism”. There is a great fashion for centralisation these days. It is said to be made more efficient by cutting the cost of “backroom activities”. So instead of 32 clerks in each local authority doing the accounting, wages, billing and procurement for the police or fire service in their area, you have 32 clerks doing it all in a new building in Fife.

You still need 32 clerks because there is the same amount of work to be done, only this time the clerks do not know the people or circumstances they are dealing with personally and are thus liable to miss out on obvious efficiencies or improvements. And incidentally, the age of the computer has made localism more possible since no one needs to re-invent their own accounting or information system – they can download the best from elsewhere.

Localism also produces a higher quality of job, since each local operator is responsible directly and individually for his or her output. The local manager really can manage and not just follow instructions from central office.

And the issue of “quality jobs” is very important. People want to have worthwhile work to do. It harnesses their creativity and their enthusiasm and is more “efficient” in the full meaning of the word. The economy should adjust to this fact. It’s a question of putting people first, not the system.

And here the ideologues are wrong. To say either the public sector or the private sector has a monopoly of wisdom is a mistake. Both have a part to play. Right now, the coalition is putting its faith in the private sector, hoping it will produce the jobs that people want to do. The results, though, are not encouraging. In the UK as whole, in the three months to June, the private sector only created 41,000 jobs, many of them part-time. Meanwhile, the spending cuts resulted in the loss of 111,000 jobs, most of them full-time. In Scotland, the figures are happily lagging behind because of the Holyrood government’s policy of postponing cuts till this year.

It is true that the private sector provides more than half of all employment in Scotland and that the number of small or medium enterprises is growing, slightly. But they only account for a little over one third of the economy (37 per cent of turnover), and most of them are one-man businesses in the service sector: joiners, plumbers, window cleaners, taxi drivers etc. The number of large private businesses (over 250 employees) has in fact gone down in the last year to just 2,260. And all these valiant enterprises, large and small, are being hit by the cuts in the public sector.

The number of jobs in the public sector in Scotland has gone down in the last year by 25,000 to 595,000. And both of these downward trends – in the public and private sectors – have hit the recruitment of young people especially hard, leaving us with youth unemployment of 20 per cent (73,000 16- to 24-year-olds.)

I am not saying the private sector never produces jobs. It has surprised us with its enterprise in the recent past, with whole new industries such as white goods, flat-packed furniture, computers, mobile phones, music, sport and entertainment programmes. But it has largely failed to produce well-paid, steady, quality jobs in alternative energy, science (except perhaps the biological sciences), education, health, social welfare, the arts and the environment. And here the government needs to step in to encourage firms to invest and grow by providing the infrastructure for their industries to flourish – broadband, railways, roads, an education system, basic science research.

It is all very well for the governments both north and south of the border to talk of training programmes and welfare-to-work schemes, but they do rather depend on there being jobs at the end of the process. And right now the jobs are not there. Both the public and the private sectors have failed to produce them.

And the same issue is plaguing countries across the globe, from the USA to India and from the Arab world to old battered Europe. “Gie us a job” can be translated into a thousand languages, but its challenge is the same.

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