Yesterday the OECD published its latest review of the UK economy. It was good stuff, GDP per capita is now the third highest in the G7, compared with the lowest 10 years earlier. It said the United Kingdom’s welcoming approach to globalisation has contributed to a strong growth performance.
The positive note continued to ring out, when it said, “Despite offshoring, employment has grown steadily and unemployment is low.”
But then the doubt started to creep in. “The labour market position of many low-skilled workers needs to be further improved,” it said, and added, “The participation rate of some groups is low and others suffer from poor incentives to progress in work.”
And what is the solution to the downside to our economy? It could perhaps be best summed up by three words, education, education and education.
It seems we can never do enough; despite the claimed improvements brought in by the government, the OECD has homed-in on our education system. “Primary and secondary schools need to make sure all young people acquire core skills before leaving full-time education,” it said, “more needs to be done to improve education outcomes for young people from low socio-economic backgrounds” and a “faster transition to a more equitable allocation of school funding would help and more should be done to encourage the best teachers to move to the most disadvantaged schools.” As for when we leave school the OECD says, “Incentives to join the workforce and to progress in work should be improved for certain groups such as second-income earners, lone parents, and incapacity beneficiaries. This may require reducing marginal effective tax rates and providing greater access to childcare support. A slower rise in the minimum wage may also improve the employment prospects of the low-skilled.”
Most of us do, of course, have two feet, and so it appears the UK has two Achilles heels. For there’s another problem with the UK. It’s not just our education, it’s also land. We are a crowded island, but then again, not that much more crowded than Germany and Italy. And yet, a shortage of land supply is holding us back in so many ways. The OECD wants to see planning regulations give more weight to economic considerations to promote firm entry and says local plans should ensure that more land is freed up for development.
It also raised the alarm over our transport system. It said, no doubt after the report’s author had been stuck on the M25, that “sufficient levels of investment in the transport infrastructure should be ensured, while the potential for more extensive road-pricing to reduce congestion should be explored.”
It does seem that, moving forward, a challenge facing the UK is to find a way the economy can continue to grow without adding to the increasingly uneven distribution of income and wealth. Improving education for the less-fortunate, and freeing up more land for property development so that high house prices don’t mean wealth is distorted in favour of home owners, would be two important steps along this route. If you like this article, why not register for our daily newsletter? Or if you already receive the newsletter, then start spreading the news and tell your friends and colleagues. To register visit this link
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