In the last episode of the very good BBC Radio 4 series “The New Workplace” Justin King, late boss of Sainsbury’s claimed that introducing a nationwide minimum wage is “ludicrous” and went on to say: “One of the consequences of productivity is fewer people producing the same output. Companies will invest more in productivity and as a consequence there will be fewer jobs.”
What Justin King has missed is that there will be fewer jobs anyway. The Oxford Martin report Technology, globalisation and the future of work in Europe says that almost all countries will face a declining labour force, and for nearly half this decline will amount to almost 40 per cent”.
Earlier this year I met a senior executive at one of Justin King’s major competitors and they told me they are “automating everything they can automate”. They are doing this to improve productivity. Automation is happening already. The competitive push for Sainsbury’s is already there.
For Justin King to suggest that putting up the minimum wage will drive companies to invest more in productivity is rather bizarre. But he is not alone in being a senior executive who is not thinking through the impact of automation – and how this will affect jobs and skills in the future.
I have been interviewing senior executives from a wide variety of sectors for a white paper I am writing on automation. There is a clear pattern, bosses are automating widely but are burying their heads in the sand as to how it will significantly change their businesses in the future. As an economy, productivity is vital for us, already we lag behind out European partners (see my blog “Can we solve the UK’s low productivity puzzle?”
The French are more productive than we are because they have invested heavily in infrastructure – not because they work longer or harder. If we are not productive then goods both for export and in our home market become more expensive and less attractive and the end result will be far more job losses than those driven by investment in productivity now.
As the BBC series acknowledges there are major changes taking place in the workplace, these are driven by technology, by the globalisation of competition and by changing attitudes to work.
If the UK is to survive these changes as a leading economy then we need to invest heavily in the infrastructure and technology that drives productivity but we also need real leadership from our business. I would argue that leadership from business is more important than leadership from politicians on this issue.
Political leaders have a narrow scope, they can make changes to the rules of the national economy, when it comes to the global economy they are powerless. There are companies now whose revenue is greater than that of countries. Other than some international institutions that struggle to agree on effective courses of action, the business world has global reach and global power.
So if we are to deal effectively with the changes that are happening in the world we need real leadership from enlightened business leaders and investors who are prepared to move beyond considerations of short term profit to deal with the longer-term issues that are affecting our economy.
If the UK is to retain a position in the global economy then we have to invest in productivity but does that mean fewer jobs?
It will certainly mean less of some sorts of jobs, big retail will be particularly badly hit but technology brings the opportunity for innovation, something that the UK has always been good at, to create new types of work.
But to manage this there need to be changes in education, in life-long learning, in technology and infrastructure.
Business leaders have a leadership role to play in creating the new world. They have to grasp what is happening and lead through it. Saying that higher productivity will damage employment is walking away from that responsibility.