6.7.8.2 Reacting to Job Losses

Automation is increasingly causing jobs to be lost across the world.  Globalisation has caused job losses in wealthy countries, as work moves to places where costs are lower (3.5.4.4).  The coronavirus pandemic has also caused job losses.  Some jobs have been lost as a result of changing to a greener economy, but those changes are also creating new opportunities.  As outlined in the previous sub-section (6.7.8.1), politicians can justify providing some government funding to compensate regions which have suffered.  It is necessary to regenerate employment in these areas.

In a Project Syndicate interview, Daron Acemoglu Says More…, this issue was put into context:

“Most people are not motivated exclusively by income. They want meaningful and secure employment, which gives them the sense of being rewarded for their labor. This means that “good jobs” – which are reasonably secure and offer decent wages – are very important for a population’s welfare and for the healthy functioning of democratic institutions.

Policymakers have largely ignored the good-jobs imperative. But there is no guarantee that markets will naturally produce enough good jobs. Left to their own devices, employers might have incentives instead to create lower-wage jobs, to automate, or to squeeze their workers (in terms of wages or security), in order to increase their profits.”

He identified four national policy changes that would help to produce good jobs: “minimum wages”, “requiring that companies include worker representatives on their boards”, “tax reforms – to discourage excessive automation” and “government funding of – and leadership on – research and development”.  He was also clear about the role of government in shaping the direction of the economy:

“Rapid and constructively-directed technological progress depends on government funding and leadership. But this doesn’t mean that the government should decide which technologies and ideas to support, let alone tell companies what to do.”

There is broad bipartisan support in both Britain and America for investment in infrastructure, though there are political differences over the size and scale of such initiatives.  As an illustration of the bargaining on Joe Biden’s American Jobs Plan, AP reported that GOP senators ready $1T infrastructure counteroffer to Biden; it noted that ” the administration and the GOP senators remain far apart over the size and scope of the investment needed to reboot the nation’s roads, bridges and broadband — but also, as Biden sees it, the child care centers and green energy investments needed for a 21st-century economy. They also can’t agree on how to pay for it.”

Green energy investments could provide a lot of “good jobs” on both sides of the Atlantic, as well as helping to address the problems of climate change (3.5.7).  The Launch Report for the Resolution Foundation study into revitalising the British economy for example, The U.K.’s divisive decade, hints at these employment opportunities:

“the UK needs urgently to accelerate an unprecedented process of decarbonisation if it is to meet its Net Zero commitments in 2035 and 2050.”

…“If we are to hit the 2050 Net Zero objective and realise the wider benefits, while avoiding huge economic costs, there must be a surge of progress in the 2020s: we need to move, for example, from installing almost zero heat pumps each year, to installing 3,000 every single day by 2030.”

This “surge of progress” would need to be stimulated by financial incentives and some government funding for research.  In one example, Shell: Netherlands court orders oil giant to cut emissions: “The company’s defence is that if people feel progress towards cutting emissions is too slow, they should lobby governments – not Shell – to change policies and introduce financial incentives”.  Governments will need to offer tax breaks for green investments and, equally importantly, incentives for customers to demand new green products.  And they need to start quickly, to meet their climate change commitments.

Tax breaks may be appropriate for investments in job-creating businesses broadly across the economy.  Industry is more likely to meet the challenges if politicians create a suitable environment with the right incentives: nationally and locally.

National governments should make funding available for employee training schemes.  These funds should be administered by local government working in conjunction with schools, universities and businesses.

Companies would also benefit from local help with planning permissions and infrastructure requirements.

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This is a current page, updated since publication of Patterns of Power Edition 3a.  An archived copy of it is held at https://www.patternsofpower.org/edition03/6782a.htm