In the mid-19th century, Britain was a nation of makers with over one third of the workforce employed in manufacturing. But Fabian Society analysis shows the long-term decline of British manufacturing means it now employs only marginally more people than the hospitality industry, and a crossover is imminent.
In his memoirs, John Cole, a former BBC political correspondent, recalls discussing British industrial policy with the economic attaché of the United States embassy in London in 1985. The chancellor, Nigel Lawson, had recently tried to justify the deterioration of Britain’s manufacturing industry to a House of Lords committee on the basis Britain was on “some natural evolutionary path towards a post-manufacturing or post-industrial service economy”.
Cole informed the attaché he had just held an audience with the prime minister, Margaret Thatcher, who had supported Lawson’s comments. In doing so, the prime minister referred to a recent meeting with an entrepreneur who wished to take over Battersea power station and turn it into a theme park.
Cole recalls how having heard this story, the attaché turned to him with a look of ‘genuine astonishment, thoughtfully laid down his fork, and exclaimed: “But gee, John, you can’t all make a living opening doors for each other.”’
Today, Fabian Society analysis shows that this door opening, post-manufacturing, post-industrial service economy has almost arrived. The number of people employed in the hospitality and manufacturing industries is now neck and neck.
Despite George Osborne’s renunciation of his predecessor Lawson’s policy with a call for a renewed “march of the makers” in 2011, manufacturing jobs have continued to decline, all be it at a slower pace than previously. Meanwhile we have seen a growth of low-skilled jobs in sectors like hospitality alongside high skilled jobs in sectors like professional services.
In hospitality, which is predominantly made up of bar, hotel and restaurant jobs, the number of jobs increased by 22 per cent between 2000 and 2015, rising from 1.8 to 2.2 million. As a result, hospitality accounted for seven per cent of the UK’s workforce in 2015 – just 303,000 fewer jobs and one percentage point lower as a proportion of the workforce than manufacturing.
If the decline of manufacturing and growth of hospitality continue, we can expect to see a crossover in the coming years. Indeed, our analysis shows that if the paces of manufacturing decline and hospitality growth continue to follow the post-2000 trend, 2016 may prove to be the year in which the crossover happens.
This crossover will be a key milestone in what economists Alan Manning and Maarten Goos call the ‘lovely and lousy’ jobs trend with middle tier jobs in industries like manufacturing in decline. Manufacturing jobs tend to offer workers progression, security and a decent wage. Bar, waiting and hotel jobs, however, are more likely to be lower paid and employees are less likely to have job security or clear progression pathways.
Given the clear benefits to the workforce, in addition to the economic benefits derived from a stronger manufacturing base, it is easy to understand the rationale behind George Osborne’s desire to trigger a march of the makers. But in hindsight, maybe the gap between Osborne’s rhetoric and results neatly summarises the UK’s industrial story: the former Chancellor got full marks for lip service, but in the end nothing of substance materialised.
I wonder if George Osborne has read Cole’s memoirs and whether the attaché’s remarks crossed his mind as he let his successor, Philip Hammond, step across him into the Treasury’s ministerial office in July.
“Gee, John, we’re all door-openers now,” he might have thought.
Sources: employment data from 2000 to 2008 is from Annual Business Inquiry, 1995 – 2007 National Results (ONS, 2007) and Annual Business Inquiry, 2008 Revised Results (ONS, 2008). Employment data from 2009 to 2015 is from Business Register and Employment Survey results for the corresponding years (ONS, 2010 to 2016)
 John Cole, As It Seemed To Me (Weidenfeld and Nicolson, 1995)
 There is a data lag as industry employment data for the year is published in September the following year (eg the data for 2015 is published in September 2016). Based on the assumption that the 2000 to 2015 trend continues, the author’s forecast suggests that in 2016, manufacturing employment fell to 2,001,275 and hospitality employment rose to 2,088,050. However, the decline of manufacturing has slowed since the financial crisis in 2008 as the chart shows. Whether or not the rate of manufacturing decline returns to its pre-crisis rate will decide how long it will be before the manufacturing-hospitality crossover happens.