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Changing employment patterns
I was originally asked a question on our parties policy towards zero hours contracts and this in turn led me onto the 
more general issue of changing employment patterns and the proliferation of low wage employment, with an emphasis on the UK.

Economies have historically progressed from agriculture to manufacturing and on to to service industries over time. 
This has been most marked in the Post 1945 era as far eastern economies have taken advantage of improved global transport and now communication  links, which has allowed low wage and hence low cost production centres to proliferate outside Europe

In our country the 2007 recession has accelerated one manifestation of this in the creation of the squeezed middle, where the gradual economic erosion of the employment market has created a lot of high paid, and lots and lots of very low paid jobs, but nothing in the middle.

The off shoring of  many service jobs means that that often only low grade staff are now needed in the UK, as anything more technical has been out-sourced to the lowest cost foreign call-centre and middle earners are gravitating to the bottom segment of the wage market as their jobs are undercut.

In theory as wages rise globally, and the low cost locations dry up, the cost base will even out. China is now finding that its economy is being undercut by low wage produced in Cambodia and Laos, but where to after that? Africa is often sited as the last remaining frontier, but there are numerous issues to be addressed on the continent from reliable electricity supplies, to basic employment skills, governance and regional stability.

There is the possibility that some manufacturing  or service functions will come full circle and return to its country of 
origin as costs even out, although this theory has yet to be proven. Political and cultural demands are often behind the move back to a UK cost base for call centre's.

The issue is how do we develop a working and economic environment which creates and retains living wage jobs, encourages and maintains economic development and prosperity whilst reaping the benefits of lower costs. 

Creating jobs encumbrances providing the incentives to invest, adequate infrastructure, a mobile, skilled workforce able to finds affordable accommodation and the right level of taxation and regulation.

As this formula is known to all globally, there is little scope for gaining a competitive advantage. The Irish republic tried lower corporate tax rates, but was eventually forced to abandon these as part of the EU rescue package.

I understand a recent discussion in the FT suggested negative income tax rates for the lowest earners or a basic minimum income, some thing which has been mentioned on the Liberal mailing list, but all fail to address the source of such funding. However these ideas simply tide people over and address the symptoms of the squeeed middle, without providing a long term solution.
One thing that needs to be considered is that the nature of work itself is fundamentally changing. We are approaching, and approaching quite rapidly, a time when there are likely to be a few very highly paid value adders and a large number of relatively low paid service providers. There are strong economic incentives that are pushing us towards a system of working where most people will not have a single job but two or three different jobs. Most of which will probably be self-employed.

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