In early 2009, when I got off a plane to begin an overseas posting in Washington, the city seemed to fizz with energy. The United States was in recession but Barack Obama had just become president after a campaign which promised “hope and change”.
I thought back to those days recently when Rachel Reeves, the UK shadow chancellor, went to Washington to deliver a speech that seemed to tap into the new political zeitgeist – an approach she has dubbed “securonomics”.
After years of slow economic growth, a global pandemic and a war in Europe, people are in no mood to believe in grand visions any more, and politicians have moderated their rhetoric accordingly. In fact, their promises seem to have retreated right down Maslow’s hierarchy of needs to settle at the basic necessities of life. Hope and change is out; “security” is now in.
In her speech, Reeves said the world was living through an “age of insecurity” in which countries like Britain were “buffeted by global forces”. Her answers to this problem were very similar to those advanced by the Biden administration: friendshoring over globalisation; industrial policy over laissez-faire; resilience over efficiency. “It is time for us to admit that globalisation, as we once knew it, is dead,” she said.
The great Guinness shortage has lessons for Diageo
Ireland has won the corporation tax game for now, but will that last?
Corkman leading €11bn development of Battersea Power Station in London: ‘We’ve created a place to live, work and play’
Elf doors, carriage rides and boat cruises: Christmas in Ireland’s five-star hotels
I think the diagnosis is right. But when it comes to the economy, I am less convinced about the cure. Insecurity is indeed a real and deep problem in countries such as the UK, but it’s hard to see how globalisation is to blame.
Let’s start with the labour market, where unemployment is low at just 4 per cent and the proportion of jobs classed as “low-paid” has dropped to the lowest since the data series began in 1997. It’s a success story on many metrics. But viewed through the lens of insecurity rather than income, there are profound and widening inequalities between workers who have a steady income and those who don’t.
In one recent paper, economists used machine learning to analyse 46 million UK job adverts between 2014 and 2019. They found “a significant shift in the distribution of work arrangements” which led to a “polarised picture” in which low-wage vacancies became disproportionately likely to be flexible, non-salaried and without full-time hours or a permanent contract.
In contrast, when flexible work was advertised for higher-paid workers, it was more likely to be offered with a fixed salary, which meant this group could enjoy the benefits of flexibility alongside the security of steady pay.
There are other ways in which the system bestows the most security on the workers who need it the least. According to one recent poll, 12 per cent of workers with incomes more than £60,000 (€69,819) said they would expect not to be paid if they unexpectedly missed a day of work due to a family emergency, compared with 56 per cent of workers earning less than £20,000 a year.
And UK government data suggests that 75 per cent of managers are covered by company sick pay schemes, compared with less than half of workers in caring, leisure and other service occupations.
Insecurity is also growing in the housing market, where a rising proportion of lower-income households are living in the least secure private rented sector.
For low-income adults born in the 1960s or before, private renting rates ranged from 5 to 20 per cent at almost every age, according to the Institute for Fiscal Studies. For those born in the 1970s, the rates have been about 25 to 30 per cent, and for those born in the 1980s, they are about 40 to 50 per cent.
Security is unevenly distributed when it comes to essentials such as electricity and gas too. While most households pay for energy in smoothed out monthly direct debits, some have to prepay for it on meters, which means unpredictable fluctuating costs based on the weather, not to mention the extra cognitive load involved in remembering to prepay before going away to make sure everything in the freezer doesn’t defrost.
An adviser at the Citizens Advice Bureau in Blackpool once explained to me that these problems compound one another. “Your income’s not stable, your work’s not stable, your housing’s not stable,” she said.
“Everything’s built on sand.” As Graeme Cooke argues in an essay for the Joseph Rowntree Foundation, giving people a sense of security can provide “a psychological, as well as a material, platform for people to take risks, think long-term [and] invest in themselves and their family”.
[ Martin Wolf: Globalisation is not dying, it is changingOpens in new window ]
There is a powerful case, then, to tackle insecurity in pursuit of a happier, healthier, more productive society.
But how much of all this is the fault of “global forces”? Is the rise of China to blame for UK prepayment meters? Did globalisation cause the shortage of affordable housing?
There might be good national security reasons to embrace friendshoring. An industrial policy which brings decent jobs to deindustrialised areas would certainly help those communities. But when it comes to the everyday insecurity that runs deep in Britain, most of the problems lie closer to home. – Copyright The Financial Times Limited 2023
