What Britain needs: fewer beauticians and more scientists
By
MoneyWeek Editor
John Stepek Mar 17, 2010
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We need to focus on creating wealth. Photo © Rolls Royce plc
What's the key to Britain's economic future?
We've heard a lot about the development of high-powered manufacturing recently. Biotechnology, green energy solutions, nano-materials – you name it, we're going to excel at it.
And Britain's most famous living inventor, James Dyson, recently produced a report on ways to rebalance the economy towards science and engineering.
Trouble is, if you're going to create this creative powerhouse of a country, then you need the people to do it with. That's why a new report on Britain's most rapidly growing jobs - the National Strategic Skills Audit - makes for such depressing reading...
Britain's most rapidly growing jobs are in the wrong sectors
In the past eight years, it seems Britain has become a nation of beauticians, town planners and psychologists. The first National Strategic Skills Audit reveals a country using its higher income to indulge in "navel gazing" rather than building the industries of the future, says David Turner in the Financial Times.
The most rapid growth has been in "conservation and environmental protection officers", whose numbers rose by 124% between the second quarter of 2001 and the second quarter of 2009. The number of town planners has also almost doubled. Other big gains have been seen in 'semi-professional' occupations. These are jobs that help more highly qualified people - teaching assistants, para-legals, and the like.
Meanwhile, off-shoring has taken its toll on heavy manufacturing and factory floor jobs. The number of electrical product assemblers has tumbled by 69%. Metal workers are in steep decline too. And telesales jobs – once the much-derided replacements for these industrial jobs – are vanishing overseas as well.
There's nothing wrong with beauticians or psychologists or town planners. (Although I don't understand why we suddenly need so many more of the last). But they aren't the sorts of jobs you need to build a world-beating manufacturing-led economy. We're pretty poor at creating those. As the FT notes, "the UK's growth in highly skilled jobs has been one of the lowest in the Organisation for Economic Co-operation and Development since 2001."
Britain's too reliant on sectors that don't create wealth
That probably won't surprise anyone who's been paying attention to the make up of British employment in recent years. Manufacturing jobs have collapsed. Public sector work has risen strongly. In fact, Chris Humphries, chief executive of the government-funded body behind the report, said: "We're actually getting higher growth in public sector jobs than is ideal in economic terms… public sector jobs don't create wealth, they spend wealth."
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This last quote gets to the heart of the problem. Britain is too reliant on sectors that don't create wealth. In the private sector, bright people have been drawn away from jobs in science and engineering by the high salaries and comparative job security of the City.
I don't know enough about the workings of the scientific research industry to comment, but I'm pretty sure it's ripe for improvement. (If you're a scientist and you have any thoughts on this, I'd be interested to hear them.) I have a close friend who's a research scientist. She has qualifications coming out of her ears, from a PhD down, and plenty of published papers. Yet she seems to spend a great deal of time moving around the country to secure short-term posts working on a variety of research projects. It seems a waste of talent.
So you can see why science graduates might be easy prey on the investment banking milk round. But the finance industry doesn't create wealth. It's supposed to allocate it more efficiently. But it's clear that in recent years, financiers have become more interested in efficiently allocating capital into their own back pockets. You only have to look at the various accounting tricks perpetrated in areas from Greece to Lehman Brothers, to realise that.
The public sector is similar. Efficient public services help the rest of society to be more productive. Good infrastructure; a healthy, well-educated population; low crime rates – all these things are worth paying for. But they don't create wealth. And like the finance industry, a lot of the money that's poured into the public sector in recent years seems to have gone to enriching its workers, rather than improving the service to the end users.
Can this situation continue? It's unlikely. Annette Cox of the Institute for Employment Studies tells the FT: "the prospect of public sector spending cuts suggests that this kind of growth in local government employment is unlikely to be sustainable." As for finance, the main reason it's doing well just now is because it's also backed by taxpayers' money. When that support runs out, things won't look as rosy in that sector either.
Life should be made easier for entrepreneurs
It's not all bad news. As Tom Bulford points out in his Penny Sleuth email, there are plenty of entrepreneurial scientists out there. He's keeping an eye on a couple of promising companies that could turn out to be very profitable for investors.
And we do still have successful manufacturers in this country. My colleague David Stevenson looked at one such company in a recent issue of MoneyWeek magazine (Profit from the return of British manufacturing). And this week, David looks at fuel cells (if you're not already a subscriber, claim your first three issues free here), another area where British companies are doing good work. But they could all do with more support. Given that there isn't going to be much public money around, the best thing the government could do is to cut red tape to make life easier for entrepreneurs.
Our recommended article for today
Hype can be very persuasive for investors. But if you only focus on the positive aspects of a potential investment, you're going to end up losing money, says Tim Bennett. Here, he explains six warning signs that should make you think twice before buying into any stock.
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