Malory Davies: Get set for the high-wage supply chain

The prime minister last month revealed the real reason for leaving the EU: so that UK can be transformed into a high-wage economy. 

He told the Conservative Party Conference: “We are not going back to the same old broken model with low wages, low growth, low skills and low productivity, all of it enabled and assisted by uncontrolled immigration… this country is going now towards a high wage, high skill, high productivity and yes, thereby low tax economy.”

And supply chain is in the front line. Transport Secretary Grant Shapps told the House of Commons Transport Committee in September: “We’ve continually allowed our domestic market to underperform by simply having wages undercut by people coming in prepared to do the job for less and in pretty bad conditions sometimes. That’s the wider picture we’re determined to resolve.”

Who could disagree with the aim? After all, the UK lags behind many of its European competitors. OECD statistics for 2020 show UK average wages of US$47,147: US$6,598 less than Germany and US$11,681 less than the Netherlands – countries that also have lower unemployment rates than the UK. 

Before Covid-19 there were about one million people in work in the UK who qualified for additional state support in the form of Universal Credit. That number has risen during the pandemic. Surely it would be better if they received a wage they could live on rather than needing state support?

The industry is entitled to ask how the government is going to lead this transformation, and what support is it going to give companies to deliver change

However, it is difficult to escape the conclusion that it would have been better to start working towards this five years ago when the strategy was, apparently, conceived rather than having it burst upon us at the last moment. 

After all, this is not a trivial transformation. On a practical level it requires training and investment in productivity-boosting technology. Many warehouse jobs are vital but fall into the low-skill, low-pay category. 

Logistics operations are structured to provide the highly flexible, low-cost solutions customers demand. 

And there is a cultural challenge. In 1983, I spent two weeks with HGV drivers, both in the UK and on the continent, learning about working conditions and how they were treated by the public. The contrast was stark: in the UK it was a low-status job; in France a respected profession. I have seen no noticeable improvement in the intervening 38 years. 

These are all things that need to be transformed. The industry is entitled to ask how the government is going to lead this transformation, and what support is it going to give companies to deliver change. 

Does it have the dedication and perseverance to see this through? Call me cynical, but I’m not putting money on it.