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UK GDP spurred on by services sector, but the growth is built on cheap labour UK GDP spurred on by services sector, but the growth is built on cheap labour
(6 months later)
The internet saved the economy. Or at least the British consumers’ obsession with all things internet. Oh, and a property boom that has filled estate agents’ pockets.The internet saved the economy. Or at least the British consumers’ obsession with all things internet. Oh, and a property boom that has filled estate agents’ pockets.
That’s the only conclusion one can draw from the figures for GDP growth in the final quarter of 2015, which show that galloping services sector output more than made up for the damage done to factory orders by the downturn in global trade and the strictures placed by George Osborne on government spending.That’s the only conclusion one can draw from the figures for GDP growth in the final quarter of 2015, which show that galloping services sector output more than made up for the damage done to factory orders by the downturn in global trade and the strictures placed by George Osborne on government spending.
Transport, storage and communications, which is a major category in the Office for National Statistics GDP data, has soared in recent times. The communications sector is all about broadband and mobile phones. What do customers like about their broadband – that it delivers TV and internet. And what do they like about smartphones these days if it isn’t the huge amounts of data bundled with their monthly package.Transport, storage and communications, which is a major category in the Office for National Statistics GDP data, has soared in recent times. The communications sector is all about broadband and mobile phones. What do customers like about their broadband – that it delivers TV and internet. And what do they like about smartphones these days if it isn’t the huge amounts of data bundled with their monthly package.
The ONS said computer programming, consultancy and related activities, most of which will be directed towards developing web-based services, increased by 7.6% during the last quarter.The ONS said computer programming, consultancy and related activities, most of which will be directed towards developing web-based services, increased by 7.6% during the last quarter.
Related: UK economic growth confirmed at 0.5% but fears of slowdown persist
Another category – distribution, hotels and restaurants – also outstripped the average 0.7% quarterly growth rate for services. The distribution element is powered by the internet as firms increase the already vast sums spent making sure deliveries of food, books and household goods arrive the next day, as demanded by ever more exacting customers.Another category – distribution, hotels and restaurants – also outstripped the average 0.7% quarterly growth rate for services. The distribution element is powered by the internet as firms increase the already vast sums spent making sure deliveries of food, books and household goods arrive the next day, as demanded by ever more exacting customers.
The ONS highlights “wholesale and retail trade and repair of motor vehicles and motorcycles, which increased by 10.5%”. Private cars sales have soared in recent years, but it is the servicing of cars and vans used in the growing internet deliveries business that is the real spur in this area.The ONS highlights “wholesale and retail trade and repair of motor vehicles and motorcycles, which increased by 10.5%”. Private cars sales have soared in recent years, but it is the servicing of cars and vans used in the growing internet deliveries business that is the real spur in this area.
A rise in the category “business services and finance” is mostly fuelled by real estate activities, which increased by 2.7% and not so much the City, which continues to suffer the after-effects of the 2008 banking crash.A rise in the category “business services and finance” is mostly fuelled by real estate activities, which increased by 2.7% and not so much the City, which continues to suffer the after-effects of the 2008 banking crash.
Reflecting this higher output growth is the increasing share of the labour force employed in services, which has grown from 73% to 80% between 1997 and 2015.Reflecting this higher output growth is the increasing share of the labour force employed in services, which has grown from 73% to 80% between 1997 and 2015.
One way of characterising this surge in activity is to say we are simply using the new technologies spawned by the internet to run faster for very little gain. That’s not how the economic thinktanks want us to think. They emphasise the need for digital creative industries as manufacturing fades as a major employer.One way of characterising this surge in activity is to say we are simply using the new technologies spawned by the internet to run faster for very little gain. That’s not how the economic thinktanks want us to think. They emphasise the need for digital creative industries as manufacturing fades as a major employer.
But the extra employment is mostly van drivers and warehouse workers and not so much in the Dundee games industry of the Hoxton app business. The low-skilled workers jetting around to support consumers buying stuff on the internet are also just as likely to be self-employed or agency workers as full-time employed, according to the latest labour market statistics.But the extra employment is mostly van drivers and warehouse workers and not so much in the Dundee games industry of the Hoxton app business. The low-skilled workers jetting around to support consumers buying stuff on the internet are also just as likely to be self-employed or agency workers as full-time employed, according to the latest labour market statistics.
And while some economists rejoice at the extra employment, whatever shape it takes, a good deal of it comes from the influx of foreign workers, which is adding around 1 million people to the UK’s population every three years based on figures for the past two years. Worse, the policy of simply adding cheap workers to increase the outputs from a particular service is another reason productivity has flatlined since the crash.And while some economists rejoice at the extra employment, whatever shape it takes, a good deal of it comes from the influx of foreign workers, which is adding around 1 million people to the UK’s population every three years based on figures for the past two years. Worse, the policy of simply adding cheap workers to increase the outputs from a particular service is another reason productivity has flatlined since the crash.
Yes, the economy is getting bigger, but the concern must be that the proceeds are being distributed among more people and by a digital economy that is seemingly built on cheap labour.Yes, the economy is getting bigger, but the concern must be that the proceeds are being distributed among more people and by a digital economy that is seemingly built on cheap labour.