In 15 years, British wages have grown only 2.2 per cent. Still want to migrate to the UK?

Is Britain growing out of growth? Strange questions beget strange answers. The response raises the prospect of human redundancy as the evolving economy makes segments of workers increasingly unnecessary to produce services and goods. Data now appears to support prophecy. In his book Home Deus, published a decade ago, historian Yuval Harari predicted the rise of the “useless class” made redundant by technology. Lording over the disempowered are the “Gods”, a tiny elite that amasses wealth, power and production. This is Harari’s “history of the future”.

 

The future, as always, is already here, manifesting in some corner of the world. Britain has been hammered by many shocks—financial crisis, Covid, Brexit and now a global trade war ignited by the unpredictable President Donald Trump whose strategic weapon of choice is the wrecking ball. Britain has come a long way from the East India Company days, but it is still a trade-dependent nation.

 

The future also comes in disguise, camouflaged under beguiling toys, dense statistics or research-rich reports. Experts agree the root of Britain’s current macroeconomic problem is “productivity”. Workforce productivity is defined as the amount of goods and services a group of workers produce in a given amount of time. In his paper ‘Yanked Away’, Britain’s Resolution Foundation’s economist Simon Pittaway reveals Britain’s labour productivity rose by a woeful 5.9 per cent and real wages by a pitiful 2.2 per cent in the last 15 years. Compare this to Britain’s previous 15 years ending 2007: productivity growth was 38 per cent and real wages rose to an impressive 42 per cent. British economists say the current level of stagnation was last seen in the 18th century.

 

It is human nature to clutch at straws, to be determinedly optimistic. Britain draws comfort that it is not alone in this economic quagmire. All but one among the advanced G7 nations are in similar doldrums. Over the last five years, British GDP per hour worked declined by 0.8 per cent, Italy’s by 0.9, Canada’s 0.5 and France’s 0.2. Germany’s—Europe’s engine and best in class—rose marginally by 0.4. The outlier is the US, where productivity rose by a stunning 9.1 per cent. It has world-class tech companies. But Pittaway concludes American high productivity is due to technology-adoption by the entire US economy. Technology-driven productivity gains bake a bigger economic pie, absorbing displaced workers. The question is will algorithms, robots and AI invalidate this 20th century mantra.

 

If American beef is pumped with growth hormones, the country’s high economic performance is pumped by massive steroid injections of stimulus during Covid. The stimulus totalled 25 per cent of GDP ($5.2tn), unimaginable for Britain, or any other country. But the stimulus also aggravated the massive US budget deficit. Trump’s reasons for waging the tariff war changes as often as his hair colour. Tariffs will bring jobs to the US, he says. Actually, China trade supported 1.2 million US jobs, but more than two lakh Americans lost their jobs after his first term China tariffs. American economists Michael Pettis and Matthew Klein argue, “Trade wars are class wars. Trade conflicts are caused by governments promoting the interests of elites at the expense of workers.” Tariffs tax the poor, but tariff revenue will fund Trump’s planned tax cuts for the rich.

 

Taxes, tariffs and transitions in the economy—where workers cannot even sell their labour—widen disparity. In March, Britain lost 78,000 jobs. What does the future look like? Harari’s dystopian answer: the rich search for immortality while workers become obsolete.

 

Pratap is an author and journalist.

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