Toyota, Honda, and many other companies in the UK are planning to move their production in other parts of the world. They are also cutting down on jobs and putting production on a temporary shut down after Brexit. However, the official Job records of the UK tell a different story. Unemployment is the lowest in 44 years, and the highest number of people are employed. The wages are also growing at a fast rate. But what is the truth behind these figures?
Wholesome news on employment
As much as the lowest rate of unemployment seems good and the lowest proportion of economically inactive people, it is not the governments doing, and by no means, it reflects anything positive from the Brexit perspective. If you dig deep into research results, then you will find that most jobs created in the UK since the crisis have been in the low-skilled and low-pay sectors. These include warehouses, bars, and social work.
Moreover, due to a decrease in wages, companies find it more beneficial to hire extra staff than investing money in technology and machinery. This is because it is comparatively easier to let go of workers than to bear losses of technologically advanced machinery that is not required anymore. Many firms have taken steps to dispense the risk of hiring staff by making claims that the staff is nothing more than self-employed workers connected to customers through a platform based on technology. However, the average real wage in the UK still sits below the pre-crisis peak at £500. Moreover, the number of children living in poverty is on its road to reach a record high by the year (2024 Resolution Foundation think tank).
Wages have been rising at the fastest pace in the last decade. It proves all the people speaking against Brexit wrong. But are they actually wrong?
While the nominal wage rate is increasing, the fact that costs are also rising cannot be ignored. Wages have risen but not as much as inflation and so the whole point of wages increasing accounts for nothing. Wages could be rising due to the cheap labor running out or reduction in immigration.
In the long-run wages can only rise if the productivity of workers increases. But the UK sees a decline in productivity mostly because companies have postponed investment due to Brexit. Most of this investment has been delayed because traders and big manufacturers are unsure about the tax changes that might take place post Brexit. Anyone would be unsure except for an accountant to do tax return.
The Big Names
Most of the world’s renowned and famous productive companies like Honda, Toyota, Nissan, Airbus, etc. have been planning on cutting down hundreds and thousands of jobs in the UK. Brexit cannot be solely blamed for this, but it surely is playing a significant role in this. Most companies are trying to delay their plans regarding this, but they are working at the mercy of uncertainty which has led them to make rational decisions for the benefit of the company overall.