Category Archives: EU

Brexit will prioritise robotics over human training

Last summer, the BBC aired a reality TV show Britain’s Hardest Workers: Inside the low-wage economy, which pitted 20 real-life jobseekers against one another performing menial, low-wage and demeaning jobs, each assessed and eliminated depending on their efficiency. Workers were given various tasks including picking vegetables, cleaning hotel rooms or sorting supermarket food deliveries in warehouses. Such examples bring an alarming reality to the era of zero-hours contracts and precarious work which provide a potent political rationale for widespread automation to liberate society from the grind of work.

Brexit was a decision taken on the basis of dramatically differing, often contradictory reasoning but one taken predominantly by an ageing, low-skilled slice of the population in the name of either controlling immigration or the perception of a reclaimed sovereignty. Now that the hourglass has been flipped, we await with trepidation as the impending negotiations unfold. However one recurring theme was played out over and over as the Brexit postmortems continued to be carried out all over the English periphery, that of identity derived from work.

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Britain’s Hardest Workers image source

Anger loosely directed towards the technocrats of the European Union for these failings to replace stable, skilled and locally recognised jobs with the drudgery of modern low-wage work is placed as blame for not limiting the brutality of the global market on domestic labour conditions. Up until this point, it has almost always proved cheaper, or more politically palatable to pay a human to carry out a basic task than invest in an automated equivalent. The idea that departing EU workers will leave jobs open for the native English to happily grab is one of the most serious on the long list of fundamental misconceptions at present. Both skilled and unskilled labour will not be able be speedily replaced by Britons since long abandoning the skilling up in manual tasks in favour of service economy jobs supplemented by reformed university courses.

For an industry such as construction, this has potentially catastrophic effects. As a recent GLA report stated, of the 348,000 construction workers currently in London, 27% are from EU countries. Early indicators are that migration from the EU to the UK is slowing post-Brexit and the present skills shortage has been well documented. Just as a rebalancing of the UK economy away from the City may be a very slim thread of positivity from this process, an obvious solution to this may be the opportunity to launch into a national skills programme for construction and manufacturing. However, as Sky’s Ed Conway recently pointed out, the government, or more specifically Philip Hammond, has for some time been mesmerised by the hypnotic lures of boosting economic productivity.

© Lindbäcks Group AB, Sweden

The most obvious route into this is automation. Laing O’Rourke recently built their own pre-fabrication facility with the help of handouts dating back to the coalition government’s Advanced Manufacturing Supply Chain Initiative (AMSCI). Such an operation is capable of churning out building components to create 10,000 homes per year. The take up of this process will, as ever, depend on subsidies and incentivisation through capital tax allowances which encourage R&D.

Building at speed for politically charged housebuilding targets may well fuse with a boom in investments in robot manufacturing. The widely influential Farmer report, stingingly titled Modernise or Die, supports calls for technological advancements to the construction industry. By moving construction away from its highly fluctuating manual labour market, Farmer argues that assembly line production with quicker outputs will stabilise the boom and bust nature of the industry.

Just as fruit picking will not be sufficiently replaced by human labour, UK-born construction workers are scarce and 20% of the existing workforce are heading into retirement within 5-10 years. Automation will continue to forge its way into political discourse as a way of relinquishing menial jobs from society. For construction however, technological improvements will come as a necessity to meet the swollen level of demand.

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Charitable Germans?

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As the Greek crisis seemingly draws to a close, having meandered along a seemingly endless path of conventions, meetings, summits and other opaque moments of EU congregation, one might allow themselves a moment of sadness to contemplate the end of a captivating yet undoubtedly sobering series of events. I for one do not (as this piece will demonstrate) claim by any means to be an economist, however the ‘Greek drama’ which has been running for at least five years now, punctuated in recent times by the refreshingly articulate political etiquette of Syriza’s leading figures Varoufakis and Tsipras, has lured previous bystanders like myself to peer in from the viewing gallery into the murky waters of European negotiations.

Popular sentiment within Europe has branded Greeks as lazy, unable to ‘catch up’ with advanced economies of the Eurozone and generally agrees that Greece should return to the Drachma as soon as possible to avoid wasting any more relief funds perceived to be snatched from hardworking German taxpayers. The idea of the Greek government simply ending its protests and climbing aboard the bailout train regardless of its terms with countries still impaled on the spike of austerity such as Ireland, Portugal and Spain conveniently forgets the grim reality of the past seven years. As Varoufakis himself has repeatedly stated, since 2009 wages have contracted by 37%, pensions by up to 48% consumer spending by 33% and unemployment reaching a total of 27%, a figure closer to 50% for Greece’s youth. Reports of greek children fainting at primary schools from malnutrition, neo-Nazis intermittently running riot in downtown Athens and Greek pensioners unable to heat or power their homes have become all too familiar. Austerity has not worked. And yet the ongoing efforts to restructure Greece through reforms, while recognising the obviously legitimate need to reconfigure Greece’s taxation and pension system, tend to point to the weary subject of austerity.

However Germany’s characterisation both domestically and in Europe as an industrious nation who has given away far too much of its taxpayers’ money to irresponsible Greece fails to recognise the fundamental structure of the EU and how it is geared in so many ways to benefit Germany. Germany is famously successful economically thanks to its export-driven economy and this idea of each country in Europe aiming to live up to or match Germany’s power in this regard is in essence flawed by the simple fact that it is impossible for all nations to have export-led economies. A weak euro, a currency which has declined by 12% against the pound over the past 12 months, allows dominant countries such as Germany to offer cheaper goods and services such as cars, appliances or pharmaceuticals to global markets encompassing around 60% of its total exports including countries such as China and the US. Yields on German bonds are extremely low when compared with countries such as Italy, Spain or Greece which allows the German economy to borrow money far more easily than its suffering southern counterparts, fuelling yet more growth. Combine this with a decline in oil prices and the German economy has had a relatively painless experience within the context of the European crisis post-2008.

Various games on either side have rather blatantly exposed the calculated nature of the ECB and the IMF’s policies, figures derived far more from political motivations than pure rationality. On Friday the ECB provided Greece’s main banks with €1.8billion of relief funds, a figure which came with the convenient caption of reminding Europeans that this was only sufficient to last until Monday, after which the banks would literally run dry, therefore artificially attempting to create a run on the banks over the weekend in order to stimulate a response from Syriza. The crucial point here, as Channel 4’s Paul Mason describes, is that Greece’s banking system cannot be controlled, interrupted or taken over by its own governmet, given the straitjacket created by the ECB. Where the UK intervened with RBS and Northern Rock in 2008, Syriza is powerless to act while living with the looming cloud of the ECB’s Emergency Lending Facility to pull the plug and witness a total collapse of Greek banks. Alexis Tsipras bizarrely attended a finance summit in St. Petersburg and was photographed speaking in an amicable manner with Vladimir Putin. In a less than subtle remark, Tsipras was quoted as saying “As all of you are fully aware, we are at the moment at the centre of a storm, of a whirlpool, but we live near the sea so we’re not scared of storms. We are ready to go to new seas to reach new safe ports.”

Whatever the conclusion on Monday to final hopes for a deal to be struck, as much as Syriza have been ridiculed by the incumbent European elite, the behaviour of Germany, the IMF and ECB has been borne out of a reluctant admittance of the consequence of Greek exit rather than acting in solidarity with the original principles of the European project.