Yes, we can create jobs – but the future lies in creating better ones

We are probably still in the early stages of the effects of the IT revolution

We will get our version of it when voters go to the polls in the Rochester by-election tomorrow. But it is universal in the developed world: a backlash against established political parties that cuts across ideological boundaries, undermining not only David Cameron, but also Barack Obama, François Hollande, Shinzo Abe and the rest. Only Angela Merkel seems able to ride over these concerns, extending reassurance, security and calm.

There are many outward manifestations of this sour mood, but underlying all of them is the idea that the great wealth machine of the post-war period is, if not broken, gravely damaged. Most people are getting poorer, or so they feel, and not only because of a severe cyclical downturn. We no longer have societies where there is a reasonable expectation that children will have a better lifestyle than their parents. That, for politicians, is a killer. The promise of a better tomorrow is the common pitch of all of them.

There are two broad reasons why it will be hard to increase living standards. One is demography, a huge societal change we have to adapt to, but one that is less serious for the UK than for most of Europe or Japan. The other, which applies across the board, is the changing structure of our job market.

This is also a long-running issue but is very much in the news right now. Today, we heard about the shortage of high-paying jobs for graduates, with the projection that three-quarters of students would not earn enough to pay off their debts. Last week, there was the study in the British Journal of Sociology that looked at the shortage of professional jobs and the way in which this increased the risks of downward mobility.

There is the work of the Resolution Foundation, which last week reported on how “some employees can move into higher-paying roles but escaping completely from low pay is more difficult”. And underlying all these changes in the job market is the rise in self-employment. That ticks up every month, and in another couple of years it is quite plausible that there will be more people self-employed in Britain than the number employed by the state.

But why? There are two main drivers: globalisation and technology. Neither are entirely new, for there was a burst of globalisation during the 19th century and technology has been advancing since the Industrial Revolution. But the pace of change is particularly rapid.

As far as globalisation is concerned, we have had something like one billion workers join the globally traded economy over the past 20 years. So existing working people have had to compete against an entirely new group, almost invariably paid lower wages. This has created opportunities for all, and brought benefits in terms of lower-priced traded goods and cheaper traded services. Some goods and many services are not traded – a Briton cannot go and get a haircut in Shanghai – but more and more are. As a result, this shift has put pressure right across the less-skilled traded sectors of the developed world.

The technological advances have changed not only the goods and services we buy but also the way they are made. On the product side, we can have a debate as to whether what we are seeing now is greater than anything seen before and there is a temptation to assume that it is.

I am not sure that is right. After all, the introduction of Henry Ford’s moving production line surely transformed the workplace more than the present electronic advances. Mass production created many semi-skilled jobs but also destroyed huge numbers of skilled ones. What I think the information technology revolution has done, however, has been to change the white-collar workplace. In particular it has enabled people to do jobs at home that previously required them to go to an office, and that is associated with the shift to self-employment.

One result has been a return to the piece-work system, where work is put out to people at home who are paid by their output, not their hours – weavers’ cottages as opposed to textile factories. While there are inevitably abuses of this growing self-employed workforce, and we are right to be concerned about zero-hours contracts, we should remember the opposition to factories when they first came in, as well as the conditions in them.

What happens next? Well, what seems to be happening is some slowing of the pace of globalisation, even a partial reversal. Some top-end manufacturing jobs are being repatriated, particularly in the US. The cost gap has narrowed, partly because wages in much of the emerging world have climbed, but also because of lower energy prices in the US. That suggests – and this is very tentative – that the extreme pressures on Western workforces from lower wages abroad are easing and will ease further.

As far as technology is concerned, however, we are probably still in the early stages of the effects of the IT revolution. We could be where production-line manufacturing was in, say, 1920. There has been quite a lot of work on the jobs that are likely to be created and the jobs that are likely to go, but we don’t really know what will happen. All we do know is that the more adaptable and better-educated we are, the better we will cope with change.

One thing, however, seems very clear. In this country, at least we know how to create jobs – for we are doing that faster than ever before in our history. No one predicted that. The task now is to create better ones, for that – not the politicians – will give us that better tomorrow.

Why fracking is not in Hockney’s frame

So David Hockney is in favour of fracking. As we reported this week, the Yorkshire-born artist believes the British need for oil outweighs the negative impact of the process. It is a hugely contentious issue, all the more so when any major figure from the art or entertainment world goes, so to speak, off-piste. When actors or pop stars voice some opinion away from their home territory, they inevitably generate resonance, and whatever one’s view of the issue, that must be worthwhile.

The interesting thing here is that Hockney is not following the soft line favoured by so many celebrities to assert their concerns for the environment – even if they insist on flying around in a Learjet. Perhaps being brought up in Yorkshire has something to do with that: not just the famed straight talking, but seeing a landscape changed utterly by coal-mining. As he said: “They needed coal, they needed oil…”

What he did not say was the extent to which fracking has cut oil and gas prices in the United States, leading to the revival in manufacturing there, and the way in which a lower oil price has changed geo-politics – for Russia is the country most hurt by booming US oil production.