So does increasing productivity really destroy jobs?

An automated car factory. Image: Getty.

There’s been a lot of debate about productivity in the last couple of mnonths, off the back of our new report on the ‘long tail’. In and amongst this discussion, one thorny question that has been raised is whether improving productivity is bad for inclusive growth. In particular, do improvements in productivity come at the cost of jobs?

The concern about these issues is understandable – in some sectors, improvements in productivity have come through the introduction of machines which destroy jobs. Manufacturing is a case in point. There are many fewer people employed in manufacturing today than in the past – 4m, which is 60 per cent fewer than 1978. What is less well known, however, is that the amount that UK manufacturing produces has actually gone up in that period by 17 per cent, as a result of improvements to productivity.

There are two reasons why productivity improvements don’t mean job losses across the economy. The first is that, while the sectors that have been responsible for productivity growth in recent years have not been directly responsible for jobs growth, they have spurred employment in other sectors. As the chart below shows, ‘exporting’ sectors (those that sell to a regional, national or international market), for example in the manufacturing and finance sectors, have seen large productivity growth but a fall in employment.

Those sectors that have been responsible for employment growth, on the other hand, tend to be local services: accommodation and food services, and arts, recreation and entertainment. These firms, as our briefing shows, have seen little or no productivity growth in recent decades. The one clear exception to this is information and communications, which has managed to provide both productivity and employment growth.

But the performance of these sectors is linked. While exporting businesses don’t create jobs directly, research suggests that the wage-increases they create through productivity growth also increases demand for local services, which in turn boosts employment in these sectors. This is known as the multiplier effect.

Growth in productivity and jobs, 1990-2017. Source: ONS.

The second reason is that these fears are based on what the economy looks like today, rather than what it will be tomorrow. Different sectors grow and decline through time; and it’s the rise of new sectors that historically have more than replaced jobs lost in those declining ones.

Looking at 100 years of economic development in UK cities, as we did in Cities Outlook 2018, shows this. There have been huge changes in the economy over that period, including large increases in productivity and an unabated rise of automation. Despite this, there are 60 per cent more jobs in urban Britain today than there were in 1911. And few would argue that we aren’t better off than our great-grandparents.


Increases in productivity may well mean that jobs decline in some sectors. It’s easy to envisage that retail will employ fewer people in 10 years’ time than it does today. But these productivity improvements also create new opportunities, new types of economic activity and new jobs. And they ultimately lead to improvements in standards of living – again, compare life in 1911 to today.

While this is good for the economy overall, it obviously isn’t good for individuals who lose their jobs as a result of these changes. The challenge, then, for policy makers, is not only to address the UK’s poor recent productivity performance – it is to ensure that people who miss out can benefit from the new jobs that this growth would create.

Paul Swinney is head of policy & research at the Centre for Cities, on whose blog this article first appeared.

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Academics are mapping the legacy of slavery in Britain’s cities

A detail of the Legacies of British Slave-ownership map showing central Bristol. Image: LBS/UCL.

For 125 years, a statue of the 17th century slave-trader Edward Colston stood in the centre of Bristol, ostensibly to commemorate the philanthropy he’d used his blood money to fund. Then, on 7 June, Black Lives Matter protesters pulled it down and threw it into the harbour

The incident has served to shine a light on the benefits Bristol and other British cities reaped from the Atlantic slave trade. Grand houses and public buildings in London, Liverpool, Glasgow and beyond were also funded by the profits made from ferrying enslaved Africans across the ocean. But because the horrors of that trade happened elsewhere, the role it played in building modern Britain is not something we tend to discuss.

Now a team at University College London is trying to change that. The Legacies of British Slave-Ownership project is mapping every British address linked to a slave-owner. In all, its database contains 5,229 addresses, linked to 5,586 individuals (some addresses are linked to more than one slave owner; some slave owners had more than one home). 

The map is not exact. Streets have often been renumbered; for some individuals, only a city is known, not necessarily an address; and at time of writing, only around 60% of known addresses (3,294 out of 5,229) have been added to the map. But by showing how many addresses it has recorded in each area, it gives some sense of which bits of the UK benefited most from the slave trade; the blue pins, meanwhile, reflect individual addresses, which you can click for more details.

The map shows, for example, that although it’s Glasgow that’s been noisily grappling with this history of late, there were probably actually more slave owners in neighbouring Edinburgh, the centre of Scottish political and financial power.

Liverpool, as an Atlantic port, benefited far more from the trade than any other northern English city.

But the numbers were higher in Bristol and Bath; and much, much higher in and around London.

 

Other major UK cities – Birmingham, Manchester, Leeds, Newcastle – barely appear. Which is not to say they didn’t also benefit from the Triangular Trade (with its iron and weaponry industries, Professor David Dabydeen of Warwick University said in 2007, “Birmingham armed the slave trade”) – merely that they benefited in a less direct way.

The LBS map, researcher Rachel Lang explained via email, is “a never-ending task – we’re always adding new people to the database and finding out more about them”. Nonetheless, “The map shows broadly what we expected to find... We haven’t focused on specific areas of Britain so I think the addresses we’ve mapped so far are broadly representative.” 

The large number in London, she says, reflect its importance as a financial centre. Where more specific addresses are available, “you can see patterns that reflect the broader social geography”. The high numbers of slave-owners in Bloomsbury, for example, reflects merchants’ desire for property convenient to the City of London in the late 18th and early 19th centuries, when the district was being developed. Meanwhile, “there are widows and spinsters with slave property living in suburbs and outlying villages such as Chelsea and Hampstead. Country villas surround London.” 


“What we perhaps didn’t expect to see was that no areas are entirely without slave owners,” Lang adds. “They are everywhere from the Orkney Islands to Penzance. It also revealed clusters in unexpected places – around Inverness and Cromarty, for example, and the Isle of Wight.” No area of Britain was entirely free of links to the slave trade.

 You can explore the map here.

Jonn Elledge was founding editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

All images courtesy of LBS/UCL