Friday, 12 December 2014

Moving the pieces around

The suggestion made by Plaid earlier this week that a change in public sector procurement could lead to more jobs in Wales isn’t new.  It’s something that the party has called for for very many years.  That’s not a criticism; using the spending power of the public sector in Wales to boost rather than undermine the Welsh economy is an eminently sensible approach.  It may be harder in practice than it is in theory, which is why oppositions tend to support it whilst governments – including the One Wales government from 2007 to 2011 – make little progress in implementing it.
That doesn’t mean that it isn’t worth working on.  Every time the public sector in Wales spends our money outside of Wales, we ‘lose’ a bit of potential GDP.  Our money ends up circulating somewhere else and adding to their GDP rather than ours.  There are environmental advantages to having a shorter and more local supply chain as well.  And I have no doubt that more local procurement will boost the number of jobs here in Wales.
I’m a little sceptical, though, about the headline figure of 50,000 extra jobs.  It’s a nice round number – too nice and too round for my mathematical mind.  And, of course, ‘local procurement’ doesn’t only work one way; other areas of the UK might follow the Welsh lead and seek to procure their goods and services more locally, which would lead to a loss of jobs in Wales.  Overall, though, I’m confident that we buy more from elsewhere than we sell there, so that we’d be net gainers, even if not quite on the scale suggested.
What we do need to be clear about though is that this isn’t, whatever the headlines might say, about ‘creating’ jobs.  ‘Creating’ is a word that politicians love to use when talking about jobs, and it’s easy to present the opening or expansion of a factory or office as something which ‘creates’ jobs.  But much of it is really just ‘relocating’ jobs rather than ‘creating’ them.  Buying the same goods and services from a different and more local supplier doesn’t result in an overall increase in economic activity; it merely moves economic activity from one place to another.  Only by drawing lines on maps and looking at what happens on just one side of the line whilst ignoring what happens on the other does it look like ‘creating’ jobs.
To repeat – that isn’t a reason for rejecting the policy or for not doing more to bring it about.  It’s a policy which would bring significant benefit to Wales.  But it can never be enough.  Real job creation depends on increasing rather than just moving economic activity.


G Horton-Jones said...

I have some sympathy with your point that Wales needs job creation rather than just moving economic activity. However I believe that society should pay people to work rather than what we have been doing, that is to pay people not to work by accepting the mantra that unemployment levels have reached or fallen to acceptable levels
Also one should examine the levels of payment across the board for all employment categories

The concept of the minimum wage or zreo hour contract is OK as long as you are not on one

Why should the NHS be so dominated by contract staff

Should Local Authorities pay massive salaries to their staff regardless of ability or performance

Is any one in this day and age worth a £1 million bonus

This list in extensive but we in Wales need to address these issues and problems that these issues cause,

We are not all in it together but we have consistently failed to address the real need for social justice across the issues of the day

John Dixon said...

"...society should pay people to work rather than what we have been doing, that is to pay people not to work..."

As a general statement, it's hard to completely disagree with that, but the ability to adopt such an approach depends on there being enough work to go round, and on a match of skills, location etc., as well as on an assumption that governments can actually control any of that in a capitalist free market economy.

One could argue that, if there isn't enough work to allow everyone to have a full time job, those choosing to accept a lower income by not working are doing the rest of us a favour by not competing for the jobs which are available, and are thus keeping weekly hours worked and salaries higher than they might otherwise be.

G Horton-Jones said...

We are conditioned to accept that those in receipt of an increasing raft of social security payments can only be integrated into society by those recipients being embraced into a job market controlled by free market capitalists
Wales needs to look outside this insidious box

Ask yourself the question

Why do we only view things within the boxes There are other ways

Sorry but your one could argue statement is nonsense

John Dixon said...


Blunt and to the point! It was intended to be provocative, certainly. We need, as you say, to look at things from a different perspective, rather than simply accept those perspectives which we're conditioned to accept. And one way to challenge those perspectives is to consider possible alternative interpretations.

My point here was simply to challenge the conventional perspective that people not working are a 'burden' on the rest of us, by suggesting that, in a situation where there aren't enough jobs for all, paying some people not to work, or even simply not to compete for work, might actually be an entirely logical thing to do.

It wouldn't be my policy of choice, but then neither is a capitalist free market economy my economic system of choice. But seeing the unemployed as simply a 'problem' largely of their own making overlooks a much bigger picture about economic relationships within the system. The effect of having a proportion of the nominally available workforce unemployed is more complex than simply a question of social security benefits.

The premises of any argument are as important as the conclusions. If we start from the premise that there isn't enough work available for everyone to have a 35 hour per week full time job, then there are two ways around that. Either some people don't work, or else the work is shared around and we all work fewer hours - probably with a consequent drop in earnings. Now, you might object that the solution is actually to increase the supply of employment, and I'd agree. But that isn't something that those without work can do; it's not their fault - and nor, I suspect, is it within the gift of governments.

G Horton-Jones said...

Herein lies the problem.

The acceptance is that there is not enough work-- is simply not true
What is true is that we allowed the City to be the basis of our economic fortunes and in so doing assumed we we rich enough to let industry and agriculture to wither against a background of cheap global imports

Not sure where you get the 35 hour full time week from nobody recognises this level of hours or even full time any more
At least 10 yrs ago Tesco started to offer 31 hour contracts at best saying that they defined full time as being 32 hour min contracts those working over 32 hours were pressured in leaving or accepting new contracts

All contracts are now on hours and days of the companies choice and typically no more than 9 hours are contracted with the income shortfall being made up of benefits It is not unusual to work with people having 4 part time jobs in a day or working alongside those with no commitment to the work as their income derives primarily from benefits
It is as you say a complex problem

John Dixon said...

I could argue about the number of hours which constitute a full-time working week; it varies between sectors and trades. But, in essence, the precise number of hours which constitute a 'full-time' job isn't particularly relevant to the argument here, which is about whether there are enough full-time jobs to go round.

You obviously believe that there are, as in "The acceptance is that there is not enough work-- is simply not true". I don't agree (although actually I presented that as a premise to an argument rather than an acceptance). Conclusive evidence isn't actually as easy to come by as one might think; there is some evidence for both views, and any conclusion depends on making a number of assumptions. (There are also a few minor little issues such as skills and locations which are all too easily lost in macro-level arguments but which are key at community and individual level.)

Certainly, if you're right, and there are enough jobs for all, and if we are prepared to be intolerant of people not taking them because of location or any other form of preference, than an approach of forcing people into jobs would reduce the benefits bill. It isn't the sort of society which I'd want to see, but it does seem to be what many politicians are close to suggesting.

But if I'm right about there not being enough jobs to go round,and if that is more than a cyclical problem which will disappear as and when the economy improves, then we need an alternative approach.