An evolving labour process – Article by Dr. Clive Black

April 13, 2017 1:45 pm
View All Posts

Geopolitics is the order of the day; any student of political science must think all their Christmases have come at once. On the other hand, I sense most entrepreneurs have probably had their fill of politics for the time being. It’s worth noting that volatility can also bring opportunity, as people seek to run their businesses to best effect in these changing times.

Times are changing so rapidly that few can predict or plan how the United Kingdom (UK) is going to leave the European Union (EU) with much certainty. This in turn begs the question of what the composition of the UK is going to be and how the UK will be trading with the Rest of the World. Will the ultimate deal maker turned politician Donald Trump be true to his word and oversee a relatively prompt and mutually beneficial trade deal with the UK?

The geographic scope for challenge appears extensive, with Gibraltar emerging as a potentially additional spanner in the UK’s path to a sensible exit, nay trade deal with the EU. The other material procedural minefield may be in Ireland, where all participants understand the need for more tempered dialogue than that of Michael Howard on ‘The Rock’, albeit the Northern Ireland Assembly is not helping matters through its own shambolic state.

Whilst all this is so, business seeks to press on. In this jigsaw puzzle of politics, perhaps the major post-Referendum concern for British business was the security of labour supply, particularly so in competitive and low margin industries like HORECA, agriculture, health and social care. Whilst there is a parallel wider debate about British living standards with inflation creeping higher against relatively stable private sector wages and salary movements, the fact remains that the UK has record employment levels with unemployment running at relatively low participation rates.

Securing the right labour in such a market is challenging at the best of times. Doing so when there is a skills shortage and an international workforce facing uncertainties over their status as residents and workers in the UK is all the more concerning.

Commonsense suggests that guaranteeing the rights and responsibilities of those from the EU working and living in the UK should be a relatively straightforward component of the UK-EU divorce negotiations. Over 2m Britons live in the continental EU, and a mutual respect should be at the fore here as folks and their employers face uncertainty.

Whilst this is so, one senses that the aggregate labour process is evolving, ever more from the business side than the local supply side. What do I mean by that? Well, it would be encouraging indeed if the steps through education and welfare policy, amongst others, were producing a domestic labour force universally motivated and skilled. In the evolving world there is the need for the UK government to genuinely listen to business on the supply side labour force priorities; and business from the CBI, but perhaps more importantly the organisations representing SMEs, need to be much more vocal and clear of their labour force needs too. I only say this because I see and hear little evidence of a clear message.

As usual, however, businesses tend to just get on with things, rather than waiting at the stop for the bus that rarely arrives. So, I also see evidence of businesses reassessing their own labour processes which may be leading to a nudge up in permanent rather than temporary staff. This could also mean a reassessment of their own training and instruction programmes, including graduate recruitment, with the Apprentice Levy also conditioning thinking. Quite whether this thinking means more UK nationals participating in the labour force remains to be seen.

Equally, under George Osborne, it can be argued that the UK labour market was upwardly repriced. In addition to the Apprentice Levy, the National Minimum Wage was introduced whilst National Insurance remained a material tax on labour (all domestically applied initiatives it should be said). That upward adjustment in labour costs which serves to attract international labour can also be expected to lead businesses to consider more automation to my mind. Indeed, functions and projects that were previously undertaken by people, rationally so, are now under consideration for automation across industries. How collectively such programmes pan out could be significant for labour demand and the employment trends mentioned above.

Whilst not wishing to overstate anything, if the supply of labour is short, the price too high, the labour quality too low, then automation in all its forms in people-centric industries can be expected to be reprioritised.

 

Written by Dr Clive Black, Advisor to Coriolis