Imagine for a moment that you work on the minimum wage. You are over 21, so you are looking forward to it going up on 1 October from £6.50 per hour to £6.70. But you know that, in reality, an extra 20 pence per hour (or an extra £33 per pay packet) is not really going to make much of a difference because of the price of food and utility bills going up.
You work normal hours, 37.5 per week. So, with little chance of promotion, you talk to your boss about overtime, about getting an extra shift each week to help bring some more cash in. It will be tiring, but, after all, it will soon be Christmas, and you’ve got kids to buy presents for.
This is real life for more than a million people in Britain. Those who work in shops and nursing homes, clean office buildings and hotels, and carry out the ‘entry level’ work in our industries.
This is real life for those who are not making enough to get by, and whose main option is: do more work. For far too many, the route to a better job – for one reason or another – is blocked. And once this phenomenon is added together, once the work of all of us is summed up, what this amounts to is the so-called productivity puzzle.
This means that, while the economy looks like it is growing, on a per head basis it is actually stagnating.
I think always of the time I spent work shadowing women in the laundry of a care home. They worked very hard. Plus they worked with people who had incontinence or other illnesses that made the laundry less than straightforward, and large in volume. It is a physical job, and one that, as I saw, was made tougher by long hours and low pay. In fact, the lowest pay possible: the minimum wage.
You might hope that such great people who dealt with difficult circumstances and hard work would steadily get promoted, and earn more. But this is just not the case. CIPD research has demonstrated that those on low pay are not optimistic about their chances of progression.
In fact, only four per cent of their low-paid respondents thought that getting better skills would provide an opportunity to earn more money in the next year, leaving the vast majority believing they had little chance.
You might think that the development of new technology and robotics might be driving out such low-paid work from our economy. But it’s not happening. Back to the future is still out of reach, as capital investment into companies for new technology has failed to fulfil its promise of higher productivity and better jobs by creating an even larger gap in skills that educational systems and current workplaces are failing to fill.
In the end, if you are going to innovate your way into growth, rather than just flog your workforce harder, you might think that you would need an ever more skilful population. Sadly the Tories’ record has been the opposite. There are thousands of jobs remaining unfilled due to a lack of candidates with the right skills. The Employer Skills Survey has shown that this has increased from 16 per cent to 22 per cent over the last few years, leaving us with the equivalent of 146,000 skills shortage vacancies.
So what does this pattern mean for the United Kingdom?
Growth in our economy has been achieved by people working more hours, not by people earning more per hour that they work. We are working harder as a country to produce the same output of goods and services as we were as long ago as 2007, before the global financial meltdown. We might have expected to have bounced quickly out of this; in fact, it has been the slowest recovery since records began.
Bank of England governor, Mark Carney, says that their forecasts show only modest growth for the year ahead, which means yet another year of stagnation. The more we go on like this, the further the long slow climb back to where our economy was at back before the crash.
Further, this is yet another way that any effort to rebalance our economy has failed. London out-indexes the other regions on productivity. Possibly because of skill level. Or infrastructure investment over many years.
But in any case, the only way to improve productivity in the UK is to have a relentless focus on the regions outside London, as well as Scotland and Wales. These areas have great higher education institutions, and strong productive industrial sectors. The problem is growing these parts of our economy in a way that also improves the prevailing skill level of the people in that area. Not an easy task, but skilful economic management and proper industrial plans would be a good start.
Then we need to really tackle the barriers that stop people moving on and moving up. Those currently in low-paid work need to be given both a proper chance to learn and make the most of new technology. And better infrastructure of all kinds for our economy – from broadband to buses, access to childcare and current accounts – must be directed at those parts of our country that are least productive.
And just in case you think that GDP ain’t nothin’ but a number, let me remind you what hard work, over long hours, for the lowest possible pay really means.
For those people in that situation it means forever juggling family responsibilities with getting to work. It means little or no time to think about study, retraining for fulfilling ambition. It means that whatever pride you rightly take in your work, knowing that our country does not prioritise your becoming what you might wish. Rather, you have to work longer hours, and run faster to stand absolutely still.
This kind of work is bad for people. It wears them out, without the promise of better.
Aneurin Bevan wrote that ‘Discontent arises from a knowledge of the possible, as contrasted with the actual.’
It’s no wonder, then, there is so much discontent around.
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Alison McGovern MP is a former shadow minister. She tweets @Alison_McGovern
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JOIN US FOR …
Britain left behind: How can we boost productivity to benefit working people? in partnership with IPA
7.30pm, Tuesday 29 September 2015
Wagner Hall, Regency Road, Brighton, BN1 2RT
Alison McGovern MP Wirral South
John Longworth Director general, British Chambers of Commerce
Nicola Smith Head of economic and social affairs, Trades Union Congress
Chair: Nita Clarke Director, the IPA
Refreshments provided. Wheelchair access available.
