Table 1 (Riddle 1987: 6)
The percentage employed in the service sector has in fact fallen between 1971 and 1981in every development category except Industrial countries where the percentage employed has risen. When we look at the GDP derived from the service sector we see that it is far superior to that of the other sectors, it has in fact increased as a percentage share of GDP in every development category accept Industrial which has seen a slight fall. Service employment is important in all economies and on a world scale it is the most important sector and yet there is no tangible good being traded, famous economists such as Keynes commented that services will never rise to such importance in a nations economy. Through the rise of globalisation we have seen a structural shift of many of the world’s industrial economies with manufacturing moving to cheaper production locations and services thriving where education standards are high and where there is a successful knowledge economy.
The fordist period of the early twentieth century saw many large companies emerging using mass production methods to produce more cheaply than previous industries had done. These production methods saw a rise in the number of large trans-national companies who would produce and sell their products in many different countries, the automotive industry is a good example. In the late 1960’s we saw the rise of post-fordism in Scandinavia and the employment of more flexible production methods, such as multi-skilled workers and professional managers (not just specialist as in the fordist model). These large companies sought to look for cheaper production locations outside their home countries, through this we saw many jobs move to locations like India and the Far East particularly but also high productivity countries such as Japan and Germany.
In the twentieth century we have seen the world economy acting very differently, with countries removing protection of their national industries and allowing market forces to move industries around the world to where they have a comparative advantage; such as textiles to cheap labour in India and the far east, and research and development to thriving knowledge centres such as Europe, Japan and the US. This has impacted deeply upon regional development at national levels.
In England there has been a steep decline in manufacturing employment in the Northern part of the country, which has traditionally had a majority of jobs from manufacturing. There has been a large increase in employment in the southern part of the country through the growth of the service sector, and as the south had very little manufacturing industry in the first instance decline in this area has modestly impacted employment. Services are a major part of the total UK economy, equating to over 70% of total GDP. Marquand (1983: 128) states that the South East’s knowledge economy and highly educated workforce give it clear comparative advantages over the rest of the UK. This is why there has been increases overtime in service employment in the South-East; the North has been slower to change with a structural lack in the types of skills required for a larger move into services. The government and EU have tried to counteract this with Regional Development Agencies (RDA’s) and funding initiatives. This has been successful particularly in automotive assembly and production pulling in companies from outside the UK to take advantage of the skills base in places like the North East and East Midlands.
Table 2 (Marshall, 1992: 205)
Table 2 shows the employment change in service industries by region in Great Britain, 1971-88 (000’s). It can be seen that the capital and regions close to it have benefited most from increases in employment in the service sector. The difference between the regions is striking, with East Anglia having a large increase of 69% with the North West having a tiny increase of only 12% over the period.
The importance of the public sector services has a large part to play in the Expansion of service employment throughout the UK accounting for three quarters of the increase in service industry employment between 1958 and 1976 (Marshall et al., 1997, pp.607). The government has traditionally had most of its administrative functions in the South-East principally London, but also many other functions which have arguably been placed in the South-East to due to linkages or access to good communications, but could otherwise be in other regions of the country. The south of England is also the principal seat of the military in the UK with Ports such as Portsmouth and Plymouth. In the post 1960’s period when many of the regions outside the south of England started to go into structural decline the government of the time initiated many regional assistance schemes to encourage new growth in deprived areas, including decentralisation of government offices, this in turn created more jobs in declining areas to service these offices. The scheme worked particularly well and was applied primarily to the largest agencies such as the Inland Revenue and sections of the National Health Service By 1994 the initiative had raised service jobs in the public sector to at least 21% in each standard region, but the South-East was still the largest region accounting for 35% (Marshall et al., 1997, pp. 611).
This highly skilled public sector workforce in the South East has arguably had a great effect on Service expansion in the area. The pool of available skilled staff is likely to have been a strong pull factor over other parts of the economy when a firm chooses to establish itself. Other factors are important though, one of the most important of these is the growth in financial services, especially after financial deregulation in the mid 1980’s. Major finance has traditionally chosen to establish in London, with much of any growth in financial services being funnelled through the city of London (Hutton, 1991). Spiralling costs in central London have caused areas peripheral to London with good communications to benefit from service expansion, especially if the areas involved have a highly skilled technical workforce. An area which is prominently associated with this is the M4 corridor, which has become an important area outside London for company head offices to establish; the Times Top 500 cites the M4 corridor as having 28 of the indexes head offices (Marshall, 1992: 208). Other factors such as Heathrow Airport and a pleasant ‘rural’ (compared to the images of the north) landscape make an attractive environment for domestic and international workers.
The England example has been of a particularly topical nature in recent press, the South of England has time and time again attracted far more service jobs than the north of England. With the structural shift of the main employment type to services there have been implications for the northern regions of the country, with a growing gap between prices and earnings levels, as levels of demand for products, space and labour in the south outstrip the levels in the north. This has given rise to the phenomena of a two-tier economy in Britain. To correct this balance will now be hard, as the skilled pool of workers who live in the south are reluctant to move to the north, with its dirty coal mining image and perceived lower quality of life. Conversely, people from the north find it harder to move to the south with a much larger price jump to move into the property market, and the generally higher cost of living in the south.
Service sector jobs are often characterised by part time and increasingly female employees, in areas such as retailing hotels and catering (Damesick, 1987: 10). This type of employment has implications for all regions in a western country. Traditionally men would go out to work while women would stay at home, performing the role of a ‘housewife’, with the rise of service employment with associated flexibilities of such jobs women have been more and more able to go to work. In some parts of the country where tourism is more important as an industry now women make up a much greater part of the workforce, as traditional roles such as mining and manufacturing have declined and these would have employed men. This has left a lot of structural unemployment amongst males in some areas where they can no longer get jobs as there skills aren’t required. This has particularly affected the midlands/north where the traditional manufacturing areas are.
Over representation of services in the south of England, coupled with predominant service growth as the main driving force behind the English economy have created conditions of widening regional disparities in England. Job creation has been more concentrated in already prosperous areas where there is a large ‘knowledge economy’, rather than in areas where job creation is more vital such in areas of England where the dominant employer (manufacturing) is declining. The continued under-representation of services in the ‘manufacturing’ areas is likely to hinder these areas growth as services will grow faster in already well established ‘service areas’. Until this balance is addressed regional disparities in England are only likely to grow, and continued growth in employment in the service industry is likely to benefit the south unevenly in relation to the north.
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