For the past week, senior Conservatives have been taking to the airwaves to talk about the new economic model they are apparently creating. A “high-wage, high-skill, high-productivity economy”, their new enthusiasm sparked by the shortage of workers since Brexit.
Though the idea has been discredited, even by rightwing thinktanks, ministers have still been repeating it – let’s face it, the idea of a brave new order in which everyone can be a high-skill worker, paid high wages, and so highly productive that the government can still cut taxes, is seductive populist politics.
Yet it is a deliberate distraction from the real crisis in the UK, which is a shortage of labour for low-skilled jobs; and if supply chains are not to collapse, it is these low-skill jobs for which we will have to start paying higher wages and improve conditions, with all the inflationary pressures that will bring.
Ministers talk about automation as a way of improving productivity, yet machines to replace these workers cannot be magicked up instantly. Business, which Boris Johnson blames for not investing, has in fact over the last three decades poured millions into automating our supply chainsso much capital has been sunk into the infrastructure of transnational just-in-time systems that they have decimated any local alternatives and will be hard to abandon.
Business has invested in its people technology too, so that workers in distribution centres can wear hi-tech, high-productivity wrist devices linked to control rooms that calculate arm movements a minute and beam orders to them to hurry up if they lag behind company targets. It is not lack of business innovation that has held their wages back.
The big lie in the government’s slogan is that, like a conjurer, it can abolish this low-skill work. Further investment in automation may reduce the need for some of it – but it is just as likely to simply create low-skilled work in new forms, in different parts of the supply chain, as it has in the past.
For a century at least, and not just since we joined the European Union, the UK has depended on importing foreign labour to do its low-skilled jobs; and for the last 70 years immigration has been managed by successive governments through a series of schemes. According to Prof John Salt of University College London’s Migration Research Unit, there are few if any cases anywhere in the world where jobs that have come to be dominated by low-paid migrant labour have been transformed to better-paid work for the domestic population. The possible exception, for a brief interlude, is agriculture in California in the mid-1960s, when a clampdown on undocumented Mexican labour saw a burst of automation and more local employment, before reverting to migrant workers again.
Poverty wages are not caused by immigration in itself, but by a failure to ensure wages and conditions for the local workforce are not forced down by exploiting migrants. The two ways to prevent a race to the bottom are by organising labour so that unions can bargain for decent pay, and by enforcing labour law. The Conservatives, with their anti-union policies and constant bonfires of regulations, brought this low-wage economy into being, however much Johnson would like to disown responsibility.
Through most of the 1960s and 1970s the share of UK national income paid out as wages was between 58% and 61%, but in the Thatcher years it declined rapidly and hit a low in the late 1990s of 52%. The share paid out in profits to private companies increased correspondingly.
Recent Tory governments have continued to promote a low-wage economy. They worked hard to block EU directives on working time, and on equal rights for agency workers that sought to curb the undercutting of existing terms.
In 2013, prime minister David Cameron abolished the Agricultural Wages Board that protected pay and conditions in low-skill farming jobs. His austerity budgets imposed such deep cuts that it would take inspectors responsible for enforcing the minimum wage hundreds of years to visit Britain’s businesses. Gang master inspectors were similarly cut back.
In January, Matthew Taylor left his role as director of Labour Enforcement, accusing the government of a “deafening silence” around protecting workers and tackling the low-wage gig economy. He has still not been replaced.
As Taylor had left, the business secretary, Kwasi Kwarteng, cancelled a consultation on transferring EU labour protections in post-Brexit Britain. A promised employment bill to bring those protections into British law has not yet materialised.
It was not the Conservative government but Uber drivers, with the help of unions, who took the company to court to claim their legal right to the minimum wage and to challenge bogus self employment.
Meanwhile, in all his bluster, Johnson makes no mention of the thing that would really give low-paid people higher wages: redistribution, so that ordinary workers receive a fairer share of the national income.
Felicity Lawrence is a special correspondent for the Guardian
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