Rebalancing the Economy – Fact or Fiction?


What progress has occurred since the government announcement that it intends to reform and rebalance the country’s economy? There is little evidence of that commitment so far in spite of a great deal of rhetoric about skills shortages, gaps, restoring a manufacturing base, productivity levels etc. Age old issues are rehearsed yet again but with little positive and lasting results. If the country is foolish enough to vote to leave the EU the situation will further get worse in terms of competitiveness, skills shortages etc. Lets hope sanity is realised.

The slogan ‘march with the makers’ coined by the Chancellor trivialises this crucially important endeavour bearing in mind the multitude of long standing and fundamental problems and factors associated with the economy. In order to resolve these problems radical solutions need to be identified and addressed recognising that many will be painful for politicians, the financial and banking services, employers and society in general.

In order to compete internationally and establish a rebalanced economy based on manufacturing the following important actions will need to be taken:

Reduce the emphasis on financial and service/consumer based industries and establish a more balanced economy founded on the manufacture of high value products and services. Credit has become the primary aim of growth – debt rules the financial systems in many parts of the world and we have a situation where there is now a form of dictatorship by creditors. In earlier time the manufacturers/producers drove the economies but now the bankers dominate and largely determine the economies of many countries.

Move from a linear to a circular economy. Rethink the design, manufacturing and distribution of products – develop a culture of recycling and cease the built in redundancy created by manufacturers. Recycle material to generate energy and to manufacture new products.

Realign the manufacturing base reducing the emphasis on military and weapons production and exports. Develop a set of manufacturing companies that produce high quality products.

Devolve powers from the City, London and the South East to the English Regions and home nations e.g. NI, Wales and Scotland exploiting the undoubted strengths of the whole country and creating a more equitable and fair society.

Develop strong trading links with the emerging economies and recognise the importance of the EU to the economy. If the country is foolish enough to vote to leave the EU the future for the economy is dire.

Raising the levels of productivity within the current work force the country has a productivity level 20% below France, 32% below America and 33% below Germany. A recent survey showed that many workers spent a great deal of their supposed working time on the internet, twitter and sending pointless emails – this partly explains the reason for low productivity.  Education and employers have a major role to play here via in-service training and CPD etc. The dire state of the nations economy must be recognised and addressed – the massive personal and corporate debt will eventually hit a brick wall and cause the country to be totally bankrupt with all the consequent problems. Continued QE will not solve the problems it has only benefitted the banks/financial sectors, the art world, high valued property markets i.e. the 1% of the population and there is no evidence of any benefit or trickle down  to the real economy and the average person. The country and its economy is based on further increasing debt and this must cease and move to producing products that the world will buy.

Massive and sustained investment in infrastructure e.g. transport – roads, railways and public transport in general, affordable housing, digital connectivity and the development of quality broad band across the whole nation.

Raise significantly the current level of skills of workers and move away from a low skill/ low waged economy/high benefit regimes. This example is reinforced by the rapid growth of zero hour contracts.

Develop business critical skills/attributes often called soft skills to prepare people entering employment. Skills such as creativity, team working, problem solving, communications, managing ones own learning etc. are increasingly becoming more important.

Reduce the amount of pointless bureaucracy imposed on employers and provide incentives for employers to train their staff. Sadly investment by employers over the past 20 years has declined every year and this intensifies during recession and turn downs in the economy.

Once and for all adequately resource FE colleges with funding methodologies that recognise high cost low recruitment in strategically important technical, practical orientated and vocational subjects.

Promote and raise the profile of the importance of technical, commercial and vocational education and training across the education system. Create a parity of esteem between FE colleges and Higher Education institutions.

Stop institutions and the school curriculum from academically drifting. Reduce the obsession with examinations and assessments and the academic dominance in the national curriculum.

More fully recognise the importance of FE colleges and training providers and the crucial role they play in training engineers, technicians and skilled practical members of the workforce. Significantly increase and sustain the funding to FECs.

Create more links between schools and FE colleges using the experience of the TVEI.

Develop more work based learning in schools and colleges with compulsory work placements and experience programmes.

Involve employers more in the development and monitoring of the school curriculum.

Continue to create and resource high quality apprenticeship programmes including those at the higher levels. The government must inform employers of the value of apprenticeships and the need for levies. Employers must know what the level of the levy means for them and the apprentices.

Develop more effective and accurate labour market intelligence methods particularly associated with supply and demand issues.

Develop more effective careers information, advice and guidance systems in schools, colleges and universities.

Develop a greater emphasis of technical and vocational elements within the national school curriculum. Create a greater balance and integration between the theoretical and practical aspects of the curriculum. Review fundamentally the balances between content, knowledge, competences and skills with the curriculum.

Tackle the need to develop mathematical, scientific and technological literacy across the curriculum at all levels i.e. school and post-16 curriculum.

Create a better balance between applied and academic skills and between the hard an soft skills in the national curriculum

Develop clear policies and strategies on skills shortages and gaps using accurate and up to date supply and demand data.

Recognise and support more fully micros and SMEs and their important place in the future economy.

Some additional thoughts:

We need to reverse the current financial policy/philosophy of placing the economy over society. The economy is currently driven by banks, financial organisations and the 1% rich and this is now acknowledged as having massively failed. The new approach should be society over economy putting social and people in the driving seat. Obviously this is a very radical proposal which does not fit with current financial practices and political beliefs.

In addition private/personal debt must be addressed and significantly reduced and if possible completely eliminated. This will allow people to invest and save and this in turn will increase demand and contribute to the health of the national economy. People at present are spending what money they have on servicing debt and coping with the costs of living, low wages, frozen annual wage increases and the continuing erosion of working conditions e.g. zero hour contracts. The high costs of covering such items as rent and mortgages continue to dominate their budgets. The obsession with property must be reduced significantly particularly in Britain.

If the economy is driven by society and its members many of the current problems will be reduced. As the nature of work is transformed by robots, the new technologies and the consequences of the global economy developed nations need to urgently review and reform the way it manages employment and the economy. The government must have a clear vision and policy on the national economy and the future nature of work and how this impacts on workers and citizens. One possibility is the introduction of Universal Benefit Income (UBI) which will allow people to survive financially. Radical and challenging reforms are now needed particularly for the developed nations like America, Britain and the EU.

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