Another week, another set of economic figures that suggest the country is showing remarkable resilience while politics implodes. Rather than fall into recession, as so many predicted, the economy leapt forward in July. We now have the lowest unemployment for 45 years, an extraordinary figure. Income inequality is near a 30-year low. The confidence crisis that politicians are experiencing is not reflected outside of Westminster.
There is little evidence to suggest that machines are taking people’s jobs. Instead, they are being used to do low-end tasks, freeing up humans to work in more complex, better-paid roles. We now have machines taking restaurant orders, checking people in at airports and fulfilling other functions inside various businesses. But never has the economy needed more people to be in work. Wages are growing at the fastest rate in 11 years. The proportion of workers employed on zero-hours contracts — a hated concept among many in the Labour party — is at 2.7 per cent. These jobs are widely confined to those who seek such contracts, preferring the flexibility they offer.
The dystopian vision of a future in which technology drives mass unemployment might be no more than a fantasy. As workers are shed by one industry, in a functioning economy they are rapidly taken up by others. While some professions have or are on the point of disappearing altogether, others come into being. Moreover, the professions that are being created tend to be more highly skilled than those that are disappearing: telephonists are replaced by software engineers, clerks by systems analysts.
True, the easy availability of low-skilled labour from eastern Europe after former Soviet bloc countries joined the EU in 2004 seems to have stalled some investment in automation. But this is already beginning to look like a passing phase, as employers who relied too much on imported labour struggle to maintain their business models as a weak pound makes inward migration less attractive. Companies that ought to have invested in technology have instead hired cheap labour from overseas: but as such workers are harder to come by, they are forced to invest in both equipment and skills.
The moral of Britain’s jobs miracle is that there is no reason to be scared of the social consequences of labour-saving technology. Automation, along with the use of artificial intelligence, deserves unequivocal encouragement. Replacement of jobs is part of the process by which societies become wealthier. It is what frees up workers for better, higher-paid roles. This, after many years of low wage growth, is long overdue.
What does destroy jobs, on the other hand, is inflexible labour markets. The main reason Britain has an unemployment rate that is less than half that of France (where it stands at 8.5 per cent) is that job-creation in the latter country is far more regulated. It is much more difficult to hire and fire staff, so employers are less inclined to create jobs if they can avoid it. The irony is that France’s employment laws were dreamed up to protect jobs — yet by discouraging their creation, they have proved counter-productive.
As we approach a general election, these issues will come to the fore. Voters will be offered a choice: the liberal, job-creating model overseen by three successive Conservative prime ministers or the world of more restrictions, regulations and taxation offered by Jeremy Corbyn. It’s a familiar theme, but Conservatives are usually bad at making their case. This time, however, they can demonstrate the benefit of passing power from the government to workers (via lower taxation), teachers (via school reform) or health workers (vis NHS reform).
In the education sector, exam results have been extraordinary. The decision to increase tuition fees to £9,000 a year, meanwhile, has allowed a huge expansion of university places. There have never been more students from deprived backgrounds benefiting from an undergraduate degree. Oxford and Cambridge are now taking a record proportion of their students from state schools, which reflects the higher quality of state education. Of all students who scored AAA or better in their A-levels this year, almost three-quarters came from state-funded schools and colleges. Under Labour, it was two-thirds.
The Tories can promise to get Brexit done and turn the page. But they can also promise more of the policies that have lowered taxes for the low-paid and increased the incentives to work. Opportunities and employment have been brought to communities who had for long been scarred by the lack of it. Excellence in education has been offered to families who would not have been able to pay for it. The Tories’ message at the next election should be simple: we are just getting started.
The progressive reforms of the past decade were hard fought and hard won. But these progressive achievements will be politically useless unless the Tories have the wit to talk about them. Now is a good time to start.
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