Page 12 - PA_Enterprise_October-November-2021

PA Enterprise
Levelling up
Levelling up the UK will take years, be costly and likely cause job losses if not
carefully prepared and managed, says expert
The government’s move towards an economy
with high-skill, high-wage and high productivity
will likely cause economic disruptions and job
losses if the government is not preparing and
organizing the transition, according to an expert
from Durham University Business School.
Professor Bernd Brandl, who for years has
researched the governance of wages, skills,
and productivity in different countries, and
what the role of interest organizations is in the
governance has examined the consequences of
the government’s transition on the economy,
businesses and workers.
Professor Brandl says that this move may be
highly beneficial for businesses and workers
in the long run, however, without planning, it
will cause painful disruptions over the next few
years as the change will not be quick, and could
take years or even decades for some businesses.
In the short run, many existing companies will
not be able to afford higher wages and go bust,
causing job losses and industrial conflict. In the
long-run the economy could benefit because
more productive, skill-driven and innovative
companies would be able to succeed on the
market.
However, the success of a successful transition
is not be taken for granted but needs to be
accompanied by policies that support business
and workers. A smooth transition will be costly
for the government due to the need to invest in
infrastructure and training facilities.
“Many British businesses have been previously
running on a low-wage, low-skill, low-
productivity business model, due to two main
reasons; in the past decades there was a constant
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influx of migrant worker who were willing to
accept low(er) wages, and second, apart from
the minimum wage, there was almost nothing
in place that prevented companies from
keeping wages low.” Therefore, many businesses
competed with each other by keeping wages
and working conditions low and they had little
incentives to invest in skills of their employees in
order to gain a competitive advantage.
Now the new economic vision of the PM looks to
replace mass immigration with higher wages and
better working conditions to encourage people
into key sectors under the guise of moving the
British economy “towards a high-wage, high-skill,
high-productivity economy”, in which “everyone
can take pride in their work and the quality of
their work”.
Professor Brandl says there are three key
elements to make the transition work. The first is
patience, the transition could take years for some
sectors, and even decades for others, it’s not a
quick change. Secondly, the transition is costly
and the government must be prepared to invest
in infrastructure and training facilities. Thirdly, the
process is likely to be painful for many business
and workers since there will likely be job losses
and social disruptions in the years ahead.
However, in order to accelerate and facilitate
the transition the government should manage
and coordinate the transition process. Preferably
together with representatives from employers
and employees so that no one is left out and the
expertise of everyone is taken on board. The way
how the government manages the transition
will also show how conflictual the years ahead
will be since the transition could be socially and
economically cushioned.
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