HAMISH MCRAE: The jobs boom must work for all with the playing field evened out
How do we create so many jobs? Last week, the US recorded the lowest unemployment in nearly 50 years, since December 1969.
In the UK we have unemployment at 3.9 per cent, the lowest since early 1975. Most of us don’t really think about this, but it is easier to get a job now than at any stage since the 1960s.
This is a stunning achievement, but it is also a puzzle. The jobs boom has not been predicted by any mainstream economist.
Last week, the US recorded the lowest unemployment in nearly 50 years, since December 1969. In the UK we have unemployment at 3.9 per cent, the lowest since early 1975
Whenever these strong figures come out in Britain they say they are ‘surprising’ or ‘despite Brexit’. They note that since output is rising only slowly, productivity must be stuck.
In the US they focus on the squeezed middle class, with people being pushed out at the bottom by low wages, or pulling out at the top as higher incomes soar.
So the jobs boom, welcome though it is, has a darker side. No one would want to see young people unable to get into work – youth unemployment is 33 per cent in Italy and 32 per cent in Spain – but if many of these jobs are badly paid and insecure, that is a recipe for social unrest too.
So what’s to be done? Well, a lot is happening already. There is the living wage, nudging employers to pay people a bit more and look to ways of using their staff’s time more efficiently.
There is more emphasis on vocational training and there are the ‘gig economy’ reforms announced at the end of last year to boost the rights of people working in the grey area between a full job contract and self-employment.
But there seem to me to be two other qualities our society needs to encourage: resilience and restraint. Everyone, whether they are in the private or public sectors, full-time or part-time, self-employed or salaried, need to be resilient.
We have no idea how jobs will change over the next 40 years. But we can be sure many of today’s jobs won’t exist, and that most people will be self-employed for some period. So we need to prepare people to cope.
And restraint? That is for people at the top. Many of the attacks on high pay are politically motivated. You can see politicians in the US starting to push against differentials there.
But you don’t need to buy the politics to acknowledge that it is hard to defend huge bonuses for executives on either side of the Atlantic who are pretty second rate. So let’s celebrate the jobs boom. But let’s try to even out the jobs playing field too.
How secure though is the global growth that delivers all those jobs? A tremor of fear is running through Washington. The world’s central bankers and finance ministers are meeting there at the IMF and World Bank.
The IMF has downgraded its forecasts for the third time in six months, which matters less than the reasons for the downgrade: slowing growth just about everywhere. Their prescription is conventional.
Don’t allow the row over trade between the US and China to get out of control. An agreed Brexit is better than a punch-up. And while central banks should be prepared to ease policy, they should not be seduced by the idea that printing money solves the world’s problems.
Hamish McRae says it’s great that Sir Blavatnik should be thinking of floating DAZN in London
There is nothing wrong with conventional wisdom, but I am more comforted by the common-sense attitude of financial markets. US, European and UK shares remain at, or close, to six-month highs.
They are not signalling a global recession, at least not yet. Actually, I rather like central bankers and finance ministers being worried. It is when they relax that the rest of us should take cover.
Reasonably strong equity prices are the essential base for floating companies on public markets. It is great that Sir Len Blavatnik should be thinking of floating DAZN in London.
It’s probably the UK’s most valuable ‘unicorn’ – defined as a high-tech company with a valuation of more than $1billion. A listing will matter for three reasons. It will help confirm the UK’s position as the biggest base in Europe for high-tech.
It will show that it is worth floating huge enterprises in London. And it will demonstrate the value to Britain of its brilliant (and generous) foreign-born immigrants such as Sir Len.