3.2.5 Availability of Suitable Labour
The availability of suitable labour is essential to wealth creation; workers need to be healthy and adequately trained.
People can create wealth by selling their time to an employer, or by being self-employed, to provide goods and services. They add to the capacity of an economy if they are employed.
There are other benefits of employment:
● Income from employment supports consumer spending, which fuels economic activity.
● Employment also reduces the need for government spending on benefits. People help the economy if they support themselves by participating in wealth creation.
● People’s income from employment is an important aspect of their wellbeing, so the availability of suitable work and its hours and conditions are very important to them – as recognised in Article 23 of the Universal Declaration of Human Rights (Appendix 1).
● People who are employed are less likely to resort to crime.
● As discussed later, people put pressure on governments if their employment is threatened (3.3.9.1).
From all these perspectives, it is advantageous to have most of a country’s population gainfully employed. This, though, is difficult to achieve when circumstances are changing rapidly, and the lack of availability of suitable labour can become a constraint on economic activity. There are three relevant factors: demographics, health and training.
Demographics
The number of people of working age in an economy depends on birth rates and migration flows. An IMF report on Germany’s economy highlights its demographics as one of its problems:
“Germany’s working-age population has been buoyed over the last decade by migrants escaping regional conflicts. As this migrant wave ends and baby boomers retire over the next five years, the growth rate of Germany’s labor force will drop by more than in any other G7 country. This will put downward pressure on GDP per person because there will be fewer workers for each retiree. It will also lead to a combination of higher social security contributions and lower pensions, absent reforms. And a more elderly population will increase demand for healthcare services, drawing workers away from other industries. Labor shortages could also deter investment.”
Health
People of working age cannot be employed unless they are sufficiently healthy. An IPPR report, Healthy people, prosperous lives, notes that: “Good health ..[is] a crucial determinant of our economic prospects, both at an individual and a national level. This has been poorly accounted for by policymakers.”. The report argues that underinvestment in health services has put a brake on Britain’s economic performance.
Training
The amount of wealth that people can create and their value to the economy depends upon their talent, education, experience, and effort. There is an increased requirement for training:
● New technologies may require new skills.
● People are likely to need re-training if they have to change jobs. Technology-driven change creates a need for repeated re-education throughout a person’s life.
● Productivity can be increased by additional training.
Some training can best be provided by employers, if it is for job-specific skills, and apprenticeships can provide both education and experience. There is an economic justification for some government spending on training, to increase the competitiveness of the country as a whole, either by providing specialist institutions or by funding private organisations.
Training is supplementary to education. General education can be provided by private schooling or by the State; it enables poorer children to overcome the limitations of parental expectation, to expand their horizons and to help them to find the best way of fulfilling their potential.
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/325a.htm