Is deindustrialisation in the U.K an undesirable process?
Is deindustrialisation in the U.K an undesirable process?
How has the mechanisation of Britain's industrial sector affected the national economy and the British population? In the early 1980's, many people became concerned with the decline of manufacturing employment and the sharp rise in the share of jobs in services. This was called deindustrialisation. Since the 1980's, the number of people employed in manufacturing in the U.K has decreased rapidly. In 1979, 7 million people were employed in manufacturing, in 2000 this figure has dropped to just 4 million, a decrease of 42%. In the early 70's, secondary activities were relatively important in MEDC's (more economically developed countries) but this has declined in favour of the more service based industries like catering and health.
We can assume that much of this is due to the increasing advances in new technology, which allow the development of mechanisation in the industrial sector and lessens the need for a large labour force. We could also look at the change in job description as people change from doing the tasks themselves to operating robots, because this is also a cause of industrial change. In order to ascertain whether deindustrialisation is undesirable we first have to look at its causes and effects.
There are many causes of deindustrialisation. In terms of internal change, there was a loss of competitiveness and technological change meant that many factories where in uneconomical locations with outdated machinery and a high cost labour force. Newer manufacturing areas had the advantages of automation and computer control systems, reducing labour costs to a minimum. Countries such as Japan and NIC's (newly industrialised countries) were able to enter the U.K market. There was also a chronic lack of investment. Oil prices had risen dramatically and this added to the fact that money for investment was very expensive to borrow. Many people say that Britain's poor industrial performance was to blame for the lack of investment. At the same time however, the British pound was very strong which meant that British goods were expensive to export but imports were relatively cheap. One of the main factors was the fact that the labour force was mainly unskilled and poor training and education schemes led to strikes as the labour force fought for better management and conditions. These 'winters of discontent' led to the perception that Britain's manufacturing industry was in a poor state.
External factors also contributed to the decline. A global shift in marketing in the 1970's, meant that the 'four tigers', Taiwan, South Korea, Hong Kong and Singapore started to industrialise, and Japan was able to become a world economic super power. Manufacturing in NIC's grew by up to 10% due to the advantage of low labour costs, cheaper raw materials and running costs, the latest technology, a well educated work force and better environmental controls. Multinational companies shifted their production to areas in NIC's, which justified costs. Also new technology meant that flexible cost-effective methods of production were ...
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External factors also contributed to the decline. A global shift in marketing in the 1970's, meant that the 'four tigers', Taiwan, South Korea, Hong Kong and Singapore started to industrialise, and Japan was able to become a world economic super power. Manufacturing in NIC's grew by up to 10% due to the advantage of low labour costs, cheaper raw materials and running costs, the latest technology, a well educated work force and better environmental controls. Multinational companies shifted their production to areas in NIC's, which justified costs. Also new technology meant that flexible cost-effective methods of production were developed.
As the nature of the manufacturing industry in Britain changes, large companies become more anxious to find cheap labour. This is becoming more evident as manufacturing is passing into the developing countries of Mauritius, and Indonesia. Deindustrialisation took place in many of the established industrial countries, including the United Kingdom, France, Germany, Italy and USA. When the oil-prices rose in the 1970's it brought inflation to Europe and many people feared a rapid decline in manufacturing as output shifted to developing countries with cheaper labour. The labour force and tasks in these countries are unskilled, which justifies a far lower wage than our western culture expects. There is no minimum wage, and because the cost of living is lower, the low wages go further. Now, many big western companies have more employees (and customers) in poor countries than in rich ones, as it is far easier to make a profit where the expense is lower. The greatest job losses have been in industries such as iron and steel, heavy engineering, shipbuilding and textiles. This meant that the old industrial areas such as the coalfields of Great Britain were struck badly.
In the 1980's, the problems had spread to all areas of manufacturing. Production was being taken to East Asia and Latin America, newly industrialised and rapidly industrialising countries (RIC's). In the Western countries, the tertiary and quaternary sectors were becoming more dominant. It became obvious that deindustrialisation was industry specific, affecting those towns and cities which relied mainly on the manufacturing industries. Those areas especially affected by the decline, were those which relied on only one or two large industrial companies. When they shut down most of that town's labour force became unemployed. Some areas were able to stop the effects of deindustrialisation because they relied on many small companies, which meant they were less badly hit by closure of factories. Not all the companies closed, and the communal work force was not unemployed at the same time.
However, deindustrialisation does not always incur negative effects. Although there were job losses, which were accompanied by overall falls in national manufacturing output, generally, productivity per person steadily increased. This meant that the manufacturing sector became far more competitive. It was only in textiles, that productivity dropped. In all other activities employment fell, but productivity increased. The regions prospered, and labour displaced by the decline in manufacturing was dispatched to new manufacturing or service sectors. The main demand now, is for workers in tertiary activities.
The U.K was particularly affected by the manufacturing decline of the 1970's. In the North of Britain there was a large population working in factories, and many communities relied on the success of their local companies. These areas were badly hit in terms of job loss, and between 1966 and 1988, most areas suffered 40% job losses. This had a devastating effect on local economy. Particularly the textile companies. There was less money in circulation in these areas, because the workers had less money to spend, which in turn led to the decline of other businesses which relied on the expenditure of the workers. East Anglia was the only region where there was a rise in manufacturing employment. It became apparent that there was a North-South divide and the SouthWest and the East Midlands experienced fewer problems than the NorthWest and Yorkshire, however, the SouthEast and the West Midlands fared just as badly as the North.
Although the dates on this graph are quite old, they do give us an idea of the scale of the decline.
There are variables, which help explain the differences found between the regions. Where there was a lot of traditional industry in the area, the most jobs were lost. Industries like shipbuilding, steel and particularly textiles, suffered a higher percentage of company closure. Also the size of the plants affected the rate of decline. Those areas, which relied on a few large firms, fared the worst, as they were more likely to downsize or close. Those firms, which located in Greenfield areas or peripheral suburban sites also did better because the areas were well connected to national communications systems and working conditions were far better. Companies were encouraged to do this with government grants, which could be used to provide new jobs in areas of high unemployment.
Deindustrialisation could be seen as a positive stage in the economic growth of a country. It allows the expansion of service sectors and job opportunities within finance and tourism etc. It involves the reduction in the workforce and result in lower costs and in turn allows lower prices for the consumer. Deindustrialisation promotes technological advancement, opening up a new sector in industry and creating more jobs in other skills based jobs.
On the whole, as Rachel Perry outlined in her email on the subject (page 25) most people view deindustrialisation as an undesirable process. It often means huge job losses and it affects many other businesses that rely on workers in the secondary sector. It has changed the structure of employment and has introduced a new generation of technologies and working practices. In 1998, 75% of the UK's labour force worked in services, and 20% in manufacturing. Unemployment is at its lowest since the sixties, air and rivers are cleaner and factory-built housing has almost disappeared, leaving in its wake a better standard of living conditions. It seems that although deindustrialisation can cause many areas to have economical problems for a few years, there are now plenty of opportunities to join the service work force, which is improving all the time. This sector generates more money and gives rise to the suggestion that deindustrialisation is the natural outcome of the process of successful economic development, generally associated with rising living standards.
