We have collectively chosen to drive the car towards an increasingly unequal society

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14 September 2015 by ATL
James Meadway, Chief Economist at the New Economics Foundation gives us his thoughts ahead of Tuesday's TUC fringe 'Will the current education system deliver skills for the workforce of the future?

There are three outstanding features of the labour market today. Taken together, they point towards what its future path may look like.

First, the “hollowing out” of the labour market over the last three decades shows no signs of abating. Deindustrialisation brought with it a huge loss of manufacturing jobs, with total employment in manufacturing dropping by over 4m over 1978 to 2008, before the crash. In contrast to services, manufacturing provided a large number of relatively well-paid, relatively secure jobs. Their replacement by service sector work led to a polarisation of employment – whilst a few (notoriously in financial services) could secure very highly-paid jobs, most were pushed into relatively lower-paid work.

This hollowing out has been worse in Britain than in the rest of Europe. It helps account for the rapid rise in inequality over the same time. On Thomas Piketty’s widely-used figures, Britain rose from being one of the most equal societies in the West, to one of the most unequal. London, epicentre of the service-sector economy, is now the most unequal city in the developed world.

Second, rewards from work are becoming detached from the work being performed. You can see this in the aggregate: productivity has risen, at least (in this country) until 2007, but pay has not kept pace. The culprit here is, again, rising inequality. A small group of very high earners are taking more of any gains in productivity.

Third, automation is reshaping how work is performed. Whilst this is a familiar part of deindustrialisation, technology is now encroaching on white-collar work. One recent, widely-reported study suggested that about almost half of all jobs in the US could be automated over the next two decades.

There is a longstanding debate in economics about how these patterns link up. Is rising inequality, and growing “job polarisation”, the result of changing technology? In particular, have advances in technology delivered increasing returns to education? If this is the case, then the future can look bleak: with technological change relentlessly driving up inequality, granting greater and greater rewards to a highly-skilled elite but pushing the rest into marginal, insecure, poorly-paid work, there will be little point equipping most students today with much beyond the minimal level skills needed to function in a computerised society: literacy, some numeracy, some familiarity with computing. The human advantages will remain in “affective labour”, which is liable to remain difficult to automate. But teaching students little more than how to smile as they hand over the double espresso to the hedge-fund whizzkid is a grim prospect.

Or is it, as Piketty argues, not just technological change but a great political shift, starting in the 1970s, that let rip capitalism’s raw potential to deliver the fruits of economic growth to a tiny, property-owning elite.

Technology is merely the engine, in this view; but we have collectively chosen, under successive neoliberal governments, to drive the car towards an increasingly unequal society. If a political choice made this happen, then a political choice can undo it. That means a well-informed, politically-engaged citizenry capable of making that change happen. The most important skills will be much as they always have been: the ability to understand arguments, the ability to think critically, and the ability to act thoughtfully.

Tagged with: 
Educational reform