Tag Archives: John Gapper FT

Government needs to formulate intelligent rules and incentives to generate productive work

In 1989, John Gapper visited a Unilever factory in Grimsby, once run by Birds Eye Wall’s, which had just won an award for industrial harmony. He records that the workers had agreed to job cuts and to work in teams, retraining and raising productivity in return for higher wages. But eventually, the ‘overriding focus on shareholder value’ forced a management decision to outsource. Unilever declared the factory too small and inefficient, closing it in 2005. Alongside the destruction of hope and employment, two years later the abandoned building itself caught fire.

grimsby-factory-fire

When capital was freed to move abroad, it became all powerful. It had been harder for companies to impose changes on their workforce when many were union members and moving production to other places was difficult. Once capital controls had been lifted in 1979, managers’ demands on workers with limited or obsolescent skills increased, using the threat of work moving to a greenfield site, or to the other side of the world.

Contrast with this situation with the stand taken by a smaller, still prospering business*:

kirsty-story

The Grimsby experience has been repeated in many places since 1989 with the loosening of barriers to trade and migration, and the unleashing of globalisation. People not educated at business schools or trained to run global supply chains had a tougher time, losing jobs and having benefits stripped. Their losses have made communities receptive to the gospel of economic restoration.

To generate and to keep productive work, investing capital more effectively for those in abandoned places, government needs to formulate intelligent rules and incentives.

The goal for companies to create decent jobs for local citizens – ‘a founding purpose of business’ (Gapper) – is only to require for all what many in London or New York already enjoy.

*http://www.birminghampost.co.uk/business/firm-quits-chamber-over-sending-3965485

 

 

 

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