This is the first global recession to affect Britain in a post- industrial age. Traditional sectors such as manufacturing and retail have been hit, but newer sectors such as financial services and the creative industries are also suffering. Unlike the recessions of the past, this downturn has not been caused by systemic weaknesses in the industrial base, hyperinflation, strike-bound workforces or major external shocks, such as the oil markets.
The biggest challenge for policy-makers is to act more holistically. Fiscal and monetary policy is a weapon against declining output, but it does not address the problem of employers taking the opportunity to shed jobs or cut training. There is also a limit to the Government’s ability to create jobs through Keynesian-style demand management. Many planned infrastructure projects are not “shovel ready” - although many further education capital projects are. A more comprehensive approach would be to address issues on the provider and employer side of the labour market, simultaneously.
On the demand side, the Government has the opportunity to work through sectors of the economy to target specific short-term recessionary pressures, as well as to prepare for the recovery. The way to achieve this is through a broader set of active labour market reforms, which would include in next week’s Budget the announcement of a UK-wide sector skills recovery plan.
There are essentially three elements to the plan, estimated to cost Pounds 300 million by the Alliance of Sector Skills Councils. The first priority is to retain existing workers with high-level skills, particularly those that will be lost completely if aggressive lay-offs are followed through. Secondly, we should retrain workers with new skills that are closely aligned to the firms’ new product, service or marketing strategies. The third priority would look at redeployment of workers to where these skills are in demand. One example is the live events sector, where there is a shortage of technicians and set builders - electricians and carpenters being made redundant by the construction industry could be redeployed.
Sector skills councils are best placed to deliver the plan because they are closest to the firms that are most affected. We need to avoid the danger of “collective amnesia”. It is not long ago that specific sectors were predicting skills and labour shortages and the UK economy lagged significantly behind the productivity levels of other countries. This hasn’t gone away. The truth is that the downturn has merely masked these underlying weaknesses. Poor productivity, bottlenecks and skills shortages will all return during the upturn, unless we plan for the recovery.
There is an urgent need to join up innovation policy with skills policy, emerging green-collar jobs and low-carbon schemes with investment in future growth sectors such as the creative industries. We need a more interconnected strategy that embraces the victims of this recession, and our colleges and universities need to be funded to deliver a world-class skills base.
Unemployment blights lives. The Government should be acting far more aggressively to build solid ground for economic recovery. Recent measures and initiatives that create jobs may address today’s crisis, but are not enough to prepare for tomorrow. This does not mean abandoning the victims of recession, but equipping businesses and people with the skills and confidence to find new success. The route to recovery is through sectors.
Tom Bewick, Chief executive, Creative and Cultural Skills.
