FIFPro global report on players conditions of employment

This post was written by Dr Andy Harvey – a Researcher at the Birkbeck Sport Business Centre and an Associate Lecturer in the Department of Psychosocial Studies.footballI am writing this as the January transfer window heads towards its final few frenetic hours, with breathless TV pundits reporting any last minute deals that clubs may make. The headlines during January have, as usual, focussed on the big money multi-million pound transfers, with Oscar’s move to Shanghai for a reputed £60m the stand out piece of business.

While the media will be concentrating on the Premier League and big name moves that helps to establish football in the minds of many as a game saturated in unimaginable amounts of money, a report from November 2016 tells a different story altogether.

On Tuesday 29 November, FIFPro, the global professional footballers’ union, released their long anticipated report on employment conditions of the world’s professional footballers. For those who are brought up on a daily media diet of staggering transfer fees and salaries of elite players at the top of the European leagues, the report will make sobering reading.

In a survey of over 14,000 players, out of a global membership of 65,000, and covering every region of the world, the report reveals that 45% of players earned less than $1000US per month, while just 2% could be classified as the super-rich elite with earnings of over $720,000 per month.

However, to observers of the global labour market such figures would not come as a huge surprise. Disparities of wealth between the lucky few at the top and the unfortunate masses below have been a growing trend to the point that in developed and developing countries, the bottom half often controls less than 10% of the wealth. Such disparities in income between rich and poor have been growing since 1980 and the adoption by countries across the globe of the neo-liberal economic model promoted by the IMF and the World Bank. It is not surprising that football, a highly competitive business, should also see similar disparities of wealth between its players.

As the FIFPro report notes, income disparity between players is a function to a large extent of the differences between wage levels in individual countries.  It should be remembered that $1000.00 a month in many parts of the world is a huge salary compared to the meagre wages that many people earn. The World Bank estimates that in sub-Saharan Africa alone, there are 389 million people living on less than $1.90 per day. So while there may be inequality within football, for the lucky few with the skills, talent and determination, football still seems to offer a better way to make a living than most. It is not surprising that young people in every part of the world still dream of making it in the big time.

However, earning a reasonable salary only means something if it is actually paid up and paid on time. One of the more startling results of the survey is that for professional footballers this is by no means certain with 41% of players reporting a delay in their salary during the previous two seasons. Some delays in salary payments lasted for over a year. These problems are exacerbated by the fact that professional footballers, unlike employees in other sectors, cannot simply take their skills elsewhere – they are subject to football’s transfer system that regulates how and when players can move to another club. At present a player can only break his contract of employment for just cause if he has not been paid for 90 days. If he tries to leave before that time he is liable to pay compensation to the club that holds his registration. This is a situation that is unique to football, and although there are good reasons for regulating the labour market to ensure stability for clubs and fair competition, it can also lead to the abuses that the FIFPro survey has revealed.

Late payment of wages is also a critical factor that threatens the integrity of football as it makes players vulnerable to the attentions of match-fixers. As I discovered in my own research into match-fixing in Europe, personal financial difficulties are a major contributing factor to corruption in sport. Large income disparities and late payment of wages, combined with the inability of players to move quickly to another club, is a perfect storm for corruption,and it is no surprise that the latest FIFPro research reveals that 1 in 11 players have been approached by a match-fixer. That is not to say that they have succumbed to temptation, but while late payment of wages persists in the game it will always be vulnerable to match-fixing.

The FIFPro survey shines a welcome light into the recesses of the world’s favourite sport that is so often insular and hard to penetrate. It shows that football is not immune from the global economic processes that have seen dramatic rises in precarious employment and temporary contracts even for professional employees. To this extent, those of us who work on the edges of the British academic system might say welcome to the modern world of short-term work and fixed-term contracts. But the FIFPro survey also highlights how the football sector has its unique systems of pressure that are exerted on its players, especially the journeymen who make up the vast bulk of the global playing staff. It is a highly competitive environment with a career-threatening injury never more than a moment away and where the pressures to perform and succeed are intense. Perhaps, most of all this report should make us all realise that a professional footballer is just another worker trying to make a living – just like the rest of us.

. Reply . Category: Business Economics and Informatics . Tags: , ,

Birkbeck’s Commitment to Occupational and Organizational Psychology – a new doctoral route at National Level?

This article is by Dr Almuth McDowall, Head of the Department of Organizational Psychology (a.mcdowall@bbk.ac.uk)

businesswoman-1901130_1920Birkbeck has a long and proud history of pioneering activities applying the science of psychology to the world of work. Birkbeck’s MSc programme was the first of its kind in the UK, and in fact coined the term ‘occupational psychology’. We remain the only dedicated work psychology department in the UK. Other countries use ‘organizational psychology’ (reflected in the current name for our department), ‘industrial and organizational psychology’, or simply ‘work psychology’. But regardless of the exact words, we all have a common aim, which is to apply our expertise to work activities.

The profession of psychology has seen several changes in the UK, not least that several titles have been protected by law for some years, including educational, counselling, clinical, sports and also,of course, occupational psychology. The intention is to provide assurance to the public, so that people know that a qualified psychologist bearing such titles has undergone rigorous and robust training, and is regulated by the Health Care Professions Council (HCPC).

While the other strands of applied psychology have long recognised the need to train to doctoral level through education delivered by universities, occupational psychology has been slightly different in that there has been only one qualification, delivered by the British Psychological Society (BPS), which leads to eligibility for ‘Chartership’, the gold standard for the profession.

But are there changes afoot about how and by whom the qualification is delivered in the future?

Together with a committed group of academics and practitioners, I have been working over the last four years towards the agreement of new standards at a doctoral level for occupational psychology, which were approved by the BPS in late autumn 2016. We briefed members of the society at the Division of Occupational Psychology Annual Conference in January 2017.

The objective of these standards is to (wording adapted near verbatim from the standards) enable practitioners to:

  • Engage in effective, ethical and reflective practice;
  • Be adept at formulating psychological activities across all five content areas of occupational psychology;
  • Apply evidence-based psychological skills and knowledge to maximise individual and organisational effectiveness;
  • Demonstrate competence to apply the consultancy cycle having provided evidence relating to all stages across this framework;
  • Acquire a breadth of areas of knowledge underpinned by the appropriate professional skills;
  • Be prepared for lifelong learning and development as commensurate for an independent applied psychology practitioner.

The underlying philosophy for the new standards is that they are flexible and broad, and will enable potential education providers to offer relevant doctoral level qualifications which take a unique and considered approach. But the common elements have to be that individuals practice ethically and with reflection, can make sense of how complex organisations are, and work through projects from the initial identification of what needs to be done through to eventual evaluation, drawing on best evidence at all times.

The profession of occupational psychology has seen many changes, as large departments have been down sized and/ or abandoned, and practitioners are now likely to be working in independent practice. This has meant that our work is perhaps less visible to those who don’t know or understand what we do. But the reality is that businesses need people, as in our knowledge economy it’s what we have in our heads, rather than infrastructure or technology, which equates competitive advantage.

This is the focus for our undergraduate and postgraduate programmes here at Birkbeck. We are now considering a new doctoral, route, too. Do get in touch by email or in the comments below if this would be of interest to you, as we are keen to engage with potential students during our scoping phase.

Further information:

This blog forms part of the ‘School of BEI’s OP week’. Follow us on Facebook or Twitter to learn more about studying in the Department of Organizational Psychology at Birkbeck!

. Reply . Category: Business Economics and Informatics . Tags: ,

What will happen to arms exports under Brexit?

This article was written by Prof Ron Smith from Birkbeck’s Department of Economics, Mathematics and Statistics, with Maria Garcia-Alonso, (University of Kent) and Quentin Michel (Université de Liège). It originally appeared on The Conversation

The decision by the UK to leave the EU will have many implications, including consequences for the control of arms exports. Exports of weapons and dual-use equipment, which can have both military and civilian applications, raise major security concerns: you don’t want to arm your enemies and you don’t want your allies to arm your enemies either.

Most states have arms export control regulations and supplies are also restricted – to some extent – by international regimes like the Wassenaar Arrangement on export controls for conventional arms, as well as by UN embargoes and the Arms Trade Treaty that entered into force in December 2014.

European states are major suppliers of military equipment and close competitors in the export markets. But they have different economic and security interests, so a sale that seems problematic to one country may not seem so to another – see, for example, the disagreements about the supply of arms to various players in the Syrian civil war or the supply to Saudi Arabia of equipment used in the Yemen. However, the EU’s rules do not allow other states to block UK sales to Saudi Arabia.

So what are those rules? To avoid exactly this sort of problem, in 2008 the EU defined common rules governing control of exports of military technology and equipment which replaced an earlier code of conduct on arms exports. This EU Common Position is presently the sole example of a group of states that have agreed to coordinate conventional (usually interpreted as not nuclear, biological or chemical which are covered by different rules) arms exports with a supranational constraining mechanism.

While producer countries have individual incentives to control the quantity, quality and use of the arms they export, these incentives are affected by the interactions with other exporter countries who have their own security and industrial objectives. In such situations, coordination among exporters is required to ensure a better outcome for everyone involved.

However, uncertainty regarding the implementation of controls and fear of noncompliance are a barrier to the implementation of multilateral controls. In particular there needs to be a mechanism to stop “prisoner dilemma” situations in which countries think: “If we don’t export, others will.” To deal with the uncertainty, the EU has a list of items subject to control and a no-undercutting mechanism to stop the fear of noncompliance by others.

Finding common ground

The EU Common Position says that member states are determined to set high common standards for the management of – and restraint in – conventional arms transfers, and to strengthen the exchange of relevant information with a view to achieving greater transparency.

The criteria that govern export control include the respect for the international commitments of EU member states (including any UN sanctions). They also take into account the situation in the buyer country, which includes its respect of human rights, its internal security situation, its respect for international law and its technical and economic capacity. The common position is also concerned for the preservation of regional peace, security and stability and the existence of a risk that the equipment will be diverted into the wrong hands within the buyer country or re-exported under undesirable conditions.

Who gets the weapons? Yui Mok PA Archive/PA Images

To make sure all states interpret these criteria in the same way – and to avoid the risk of unfair competitions between member states’ defence industries, several mechanisms have been adopted. These include strengthening the exchange of information by requiring the notification to all EU member states of the denial of a licence, together with the no undercutting rule. This rule has been respected and member states have almost never undercut a licence denial without the consent of the state which has issued it.

There are many difficult areas where exchange of information is valuable. These include dual-use equipment – where countries may differ over whether it is going to be used for civilian or military purposes – and brokering – where a firm facilitating the transaction may be outside the control of national authorities. There has been discussion in many countries about the extent to which arms brokers should be registered.

Britain’s role

Britain plays a central role in this process, currently drafting the list of items subject to control. But when it leaves the EU it will lose access to this mechanism. This increases the risk that its defence industry will not face the same trade rules as its EU competitors. While the UK will no longer be constrained by EU rules, the converse is also true and – given the breadth of UK security interests – this may not be to its advantage.

Other EU states will be able to supply weapons for which the UK has denied a license and may not include on the control list items that the UK regards as sensitive. So given the value that countries attach to the sharing of arms export information, it may be in the interests of the UK and the other EU countries to maintain joint participation in these arrangements even in the post-Brexit era.

The Conversation

 

. Reply . Category: Business Economics and Informatics . Tags: , ,

Behind Birkbeck’s new visual identity

pocket-guides-etc-croppedIt’s an unusual position for an organisation to find itself in: on the brink of its third century and still no signature style. Imagine Apple without its elegant designs and simple use of space; or Google minus its primary-colours and clean white canvas.

So, just a few years shy of our 200th birthday, we thought it was time such a unique and vibrant university had the coherent and contemporary look it deserved.

What we wanted was a clear, well-considered look and feel that stands for Birkbeck, which is fortunate to possess two rare things: a real Unique Selling Point (as the UK’s only evening university) and a heritage to die for (a core mission which has remained unchanged for 200 years, of educating working Londoners).

So, where to start? We had a 20 year-old ‘lockup’ – a logotype and crest, always seen together on a burgundy panel; and a blue theme inherited from a decade-old advertising campaign. We didn’t want to change the lockup (the burgundy has been darkened and the crest reversed to give greater contrast). But the older and newer looks didn’t always sit together favourably and the visual identity void led to a variety of styles that were not always recognisably ‘Birkbeck’.

new-pop-up-exampleThe challenge, then, was to create an identity – typefaces, colour palette, ways of presenting information – that would live happily alongside the lockup and work across digital and printed channels and products for years to come.

Importantly, the identity needed to be easy for people across the university to put in to practice. We have a small central design team, but many others across the organisation have some responsibility for design, stationery or leaflets, for instance.

We hired Pentagram, the world’s largest independent design consultancy, after a competitive process during which we were wowed by their careful understanding of Birkbeck, creative problem-solving and knowledge of the Higher Education sector having worked with the University of the Arts and the University of Sussex.

A cross-university steering group of academics and professional staff were convened to discuss Birkbeck’s personality and how it might be portrayed visually. This group became essential arbiters throughout the process, helping to define and refine ideas and schemes.

And together we came up with a visual identity that is both beautiful and practical that reflects Birkbeck’s ‘attitude not age’ approach to higher education for all – inclusive, vibrant and world-class.

Domenic Lippa, partner at Pentagram, said: “We wanted to create a visual identity that used the heritage of the existing logo.  To do this, we anchored all information off of the logo, thus creating a strong hierarchy. Once we established this, the ‘heart’ of the identity, we started to introduce new typefaces, colours and imagery to support and counter-point that heritage.”

social-mock-up-croppedThere is enough flexibility to give people across the university room to ‘play’ with the identity, for instance by an unrestricted colourful palette and playful new ways of using our crest’s iconic owl – signifying our evening study. But brief, user-friendly guidelines gently help people stay within a ‘safe space’, ensuring Birkbeck always looks the part.

Needless to say the list of products queuing up for an identity make-over is long – from signage and stationery to websites – so the process of switching our look will take some time. We’ll take it gradually. We wanted to share the design with staff and students first, of course and there will be face-to-face briefings for people who work with design and on-going support from the central design team.

Externally, the new look will be debuted by our new marketing campaign which launches after Christmas with advertisements across the London underground and buses. Our annual magazine BBK will be sent to our alumni and friends shortly afterwards, sporting the new identity. And thereafter, as we proceed throughout 2017, e-newsletters, stationery, Open Evening livery, the 2018-19 prospectus, a new website design and many other products will follow on.

Professor David Latchman, Master of Birkbeck, said: “I am delighted that Birkbeck is getting its first ever visual identity. As we move towards our third century this colourful, modern look helps communicate with the vitality, passion and professionalism of our world-class university.”

–  Julia Day, Head of Communications at Birkbeck

. Read all 18 comments . Category: Arts, Business Economics and Informatics, Law, Science, Social Sciences History and Philosophy . Tags: ,

Did the London 2012 Olympics boost the British economy and make us all happier?

This blog was contributed by Mark Panton, a researcher from the Department of Management at Birkbeck, in reaction to a recent publication by the ONS, which links GDP to special historical events. Mark tweets at @MarkLPanton

olympics-227178_640As a researcher of the use of sport events and stadiums in regeneration projects I was interested in a   recent graphical representation of how special events are linked to UK Gross Domestic Product (GDP) put out by the Office for National statistics (ONS). The representation showed a sharp spike in GDP at the time of the London 2012 Olympics and Paralympics.

There has been a long-running debate within sport management about whether or not hosting major sporting events can have an impact on local or even national economies.  At first sight this ONS graphic, together with its accompanying text, sets out a very positive case for the 2012 Olympics.  The highest growth for nearly seven years in the UK was recorded in the third quarter of 2012 when it increased by 1.1% over the previous quarter.   This included increased output in the food and beverages industries, accommodation, employment agencies and creative arts and entertainments.  Was this conclusive evidence for the economic impact of a major sporting event?

Further explanatory details were provided by a separate ONS document.  Due to an additional day of holiday in June for the Queen’s Diamond Jubilee, there was one fewer working day than usual in the second quarter.  This was estimated to have shaved 0.4% off growth in that period with a ‘bounce-back’ of the same amount in the third quarter.  Another relevant aspect was that the sales of Olympic and Paralympic tickets, clocked up over a long period before the start of the Olympics and totalling £580 million, were all allocated to the third quarter of 2012.  This figure contributed 0.2 percentage points to overall growth.  It should also be noted that the same document details a drop in tourism in this quarter, with a significant dip in numbers visiting London.  Far from the conclusive evidence that might have been imagined from the graphical representation.

However, there was some good news for those looking to stage major events and the local communities. A detailed report by Oxford Economics on the impact of the London Olympics suggested the event may increase residents’ happiness, which could translate into increased consumer spending. This claim was based in part on research linked to the 1996 Euro Championships in England. The report acknowledges that the evidence for such effects is mixed and no figures for increased spending around the London Olympics based on happiness have been found.

Researchers from the LSE did find that Londoners were significantly happier during the Games compared to Parisians and Berliners, but that levels of happiness returned to normal the following year. More critically, researchers in the USA have argued against the use of “psychic income” (emotional and psychological benefits for residents related to sporting events) to support public subsidies for stadiums or events, with the concept being used as the “new frontier in subsidy apologias”. The arguments over the economic and psychic benefits of holding major sporting events are likely to continue.

Listen to Mark in a discussion on Sports stadiums on the Birkbeck Voices podcast.

. Reply . Category: Business Economics and Informatics . Tags: , , , ,

Google’s new NMT speaks its own language

This post was contributed by Alan Mosca, a PhD student in Birkbeck’s Department of Computer Science and Information Systems. Alan tweets at @nitbix

A Google research group has announced a breakthrough that could have a deep impact on the field of automated translation of documents and web pages.

In the recently released article “Google’s Multilingual Neural Machine Translation System: Enabling Zero-Shot Translation” they show how their Neural Machine Translation (NMT) system is able to perform translation between pairs of languages, for which the system has never seen any examples.

In practice, this means that Google’s system is able to automatically translate between two languages, without adopting the “trick” of interlingual translation. (Interlingual translation is a technique commonly adopted in machine translation, of using a common intermediate language to bridge two languages for which there is no corpora available. In this example, the translation would be French -> English -> German, and vice versa, using English as the bridging language). This occurs through a common deep learning method called Long-Short Term Memory (LSTM), through which a machine can learn how to translate between, say, English and French and English and German by processing examples of translations.

The exciting development is that all of this is achieved in a single model, which is able to operate on multiple language pairs. It even appears to have had the effect of the model developing its own “internal representation” of concepts, which is completely independent of the specific languages it learns to translate. The examples in the paper are not limited to European languages, either – the system is able to translate between Japanese and Korean without seeing a simple example that joins the two languages. An example of how this works is shown in Fig. 1.

Fig.1: Example zero-shot translation after training on an intermediate language

Fig.1: Example zero-shot translation after training on an intermediate language

 

All of this, of course, is done inside a deep learning model: an LSTM. The multi-lingual translation is achievable in the single model by adding a token for the destination language in the input. For example, if one wanted to translate “Hello, my name is Bob” to Spanish, the input would be “<2es> Hello, my name is Bob”.

A further exciting observation made by researchers from Google Brain is that the system does not need to be told what language the input is in, disambiguating the difficult cases on its own. Take the word “burro” for instance: it means “butter” in Italian but “donkey” in Spanish. Even for words that have the same spelling but different meanings in different languages, the system is usually able to discriminate based on context.

The model learns an “encoder” LSTM and a “decoder” LSTM; it has a similar appearance to multi-layer auto-encoders. The centre contains an attention model, and the layer just before the attention is the one that outputs the “common encoding”: a semantic representation of the input that is language-independent.

Being Google, as well as testing on the benchmark datasets in machine translation, they used their own internal dataset, which is probably very large and certainly very private. The code is very private too, but the researchers have given us an insight into the kind of infrastructure they needed: 100 (presumably state-of-the-art) GPUs, trained for over 3 weeks. The results are impressive, beating state-of-the-art ad-hoc models in a few cases. For a single model developed for multiple languages, Google’s NMT system provides a great advantage, and we should expect ever better translations from Google Translate as a consequence.

 

. Read all 2 comments . Category: Business Economics and Informatics . Tags: , , ,

Community: The Mother of Invention

This post was contributed by Matthew Jayes, Business Development, Communication and Enterprise Manager in the School of Business, Economics and Informatics

A report into student entrepreneurship compiled by Public and Corporate Economic Consultants (PACEC) identified independence and flexibility of self-employment as the major pull for graduates to seize the opportunity to become their own bosses. But from what or from whom do they gain independence? Does workplace employability restrict flexibility, despite the right to request flexible working?

Most responsible businesses communicate their impact on their respective environment, stakeholders and employees. How, then, should universities frame the concept of student entrepreneurship? Negatively, as the freedom from external restraint on the individual’s actions; or positively, as the ability of an individual to act upon free will, providing the outcome does not harm others?

enterprise-300pxwIn all likelihood, it remains the role of the university to clearly articulate the known options and help students to navigate their chosen path. For this reason, Birkbeck offers unique support to students interested in developing new ideas (Enterprise), and new businesses (Entrepreneurship), in the form of Enterprise Pathways. Many Birkbeck students have commitments beyond their study, in the form of work, care, societies or volunteering. To accommodate these constraints the pathways on offer allow different students to engage in different ways, from a variety of starting points.

Every academic year, we offer the Boot Camp pathway, which brings together students from different organisations to work in small groups to develop new ideas on a given theme. The autumn 2016 Boot Camp will be held at Runway East in partnership with Central Saint Martins, University of the Arts London, Goldsmiths, University of London, and Sotheby’s Institute of Art, London. The theme is Future of Media and will be facilitated by invited guests such as Kirsty Styles, Programme Lead, Talent and Skills, Tech North.

Students interested in a longer path have joined the Birkbeck Enterprise Community, Competitions and Awards (BECCA) course, running from November to July. These students, from various courses at Birkbeck, build networks and develop their ideas as part of a supportive community augmented by external facilitators. The first session in November 2016 featured Damola Timeyin, Strategist, BBH London, leading the Saturday morning meeting on “Creativity”, where he urged the audience to fully embrace diverse opportunities, experiences and communities.

The first BECCA session

The first BECCA session

Birkbeck students hoping to develop ideas independently are encouraged to follow the digital pathways online. Simply Do Ideas offers an online idea testing tool, through which students can directly access support from the Enterprise Pathways team. Enterprise Pathways has also partnered with The Digital Garage from Google – a digital skills training platform assisting students to grow their business, career and confidence.

So –where do these pathways lead? Each has its own distinctive outcome; however by forming a strong community and deep understanding of our students, Enterprise Pathways helps to map a bespoke route to future destinations. At the heart of London, a global creative city, we help our students to identify what could enhance their enterprise journey. Enterprise Pathways empower Birkbeck students to make a positive impact on society by thinking differently.

Notes

  • Places for Birkbeck students at the Future of Media Boot Camp have now been allocated, however please email Enterprise Pathways to join the waiting list.
  • The full BECCA programme is available online. While the course is at capacity, interested students should contact Matthew at the earliest opportunity.
  • Links to Simply Do Ideas and The Digital Garage from Google are for enrolled students only, available on the Enterprise Pathways website.

Further Reading

. Reply . Category: Business Economics and Informatics . Tags: , , , , ,

If we want the UK-born poor to vote Remain we need to take their grievances seriously

This post was contributed by Professor Stephen Wright, of Birkbeck’s Department of Economics, Mathematics and Statistics.

drapeaux européens

I am a Remainer. As an economist the arguments for staying in the EU seem to me pretty clearly to outweigh the arguments for leaving. As a private individual I also clearly benefit from the EU. Polish carers look after my 97-year old mother (very well). I work in multiethnic and prosperous London. I have a Serbian-Dutch prospective son-in-law. I travel quite often in Europe and like the cheap flights (who doesn’t?). And the Central and Eastern Europeans who serve my coffee at the station are so polite and efficient.

But when personal incentives coincide with intellectual arguments we need to be careful. When I criticised the pro-Brexit arguments of Patrick Minford of Cardiff University in an email he responded that my arguments were a “metro-elite rant”. He had a point.

I quote from his email (my insertions in parentheses for clarity)

The problem is the balance between skilled and unskilled (migrants) and the complete lack of control that affects large swathes of the country with pressure from large numbers of
unskilled (migrant) workers: effects on housing, hospitals and schools, not to speak of wages (though evidence here is hard to get). Look, if the elite will not compensate these guys they must expect a political explosion which they have now got.

I reiterate: I am, and remain, a Remainer. But Patrick does have a point. If we Remainers do not take these arguments seriously, and – ideally – try to persuade policymakers to do something about these problems – there is a very serious risk that the Brexiteers will win the vote.

One chart, from the LSE’s John Van Reenen and co-authors (See Footnote 1) tells most of the story.

CEP 6

Source: CEP analysis of Labour Force Survey. Wadsworth et al. (2016: 7). Notes: Median wage is deflated by the CPI.

And, as with so many charts, the story that it tells depends on your perspective. From the perspective of a UK-born worker at the lower end of the distribution what they can see, without any advice from expert economists, is that the real value of their wages has fallen almost continuously (by around 10% for someone on the median wage –See Footnote 2) since the peak before the crisis. They can also see, without the aid of the chart (who cannot?) that at the same time the share of EU migrants in the population has risen steadily. And, inevitably they draw a link between the two phenomena.

Van Reenen and co-authors point out (quite correctly) that the share of EU migrants had been rising well before real wages started falling, indeed, as the chart shows, during a period in which real wages were still rising steadily. They also point to a range of evidence showing a lack of a link between EU migration and UK-born wages or unemployment. And they reiterate the arguments that Brexit would lower GDP via reduced trade, job losses, and higher prices of imported goods.

So should we just dismiss the arguments about EU migration as xenophobic scaremongering? Well of course a lot of it is pretty unpleasant, and often verges on the xenophobic. But that does not mean we can simply dismiss the arguments out of hand.

Wages and unemployment, first of all. Is the case against a link proven by the lack of a correlation? Here is one of the charts that Van Reenen and co-authors use to make their case.

Source: CEP analysis of Labour Force Survey. Wadsworth et al. (2016: 10). Notes: Each dot represents a UK local authority. The solid line is the predicted ‘best fit’ from a regression of local authority percentage change in wages on the local authority change in share of EU immigrants. These are weighted by the sample population in each area. Slope of this line is -0.08 with standard error of 0.15, statistically insignificantly different from zero.

Source: CEP analysis of Labour Force Survey. Wadsworth et al. (2016: 10).
Notes: Each dot represents a UK local authority. The solid line is the predicted ‘best fit’ from a regression of local authority percentage change in wages on the local authority change in share of EU immigrants. These are weighted by the sample population in each area. Slope of this line is -0.08 with standard error of 0.15, statistically insignificantly different from zero.

This shows that there has been essentially a zero correlation between changes in real wages in any given local authority and the increase in EU migration in the same local authority. Case proven, it seems.

But pause, just for a moment. Basic statistics courses teach that “correlation need not imply causation”. But there is a subtler version: lack of correlation need not imply lack of causation. Here’s a simple argument (which is easy to substantiate with a couple of lines of algebra).

Suppose that real wages at a regional level tend to be stronger (which in recent years typically means to fall less rapidly than the average – look at the y-axis on the chart) where the regional economy is stronger. And suppose that EU migrants know this. Where will they tend to move to in the UK? Well, to the more prosperous regions, of course. Now suppose that the Remain arguments are correct, and more EU migrants do not have any effect on wages. If that was the case, then we should expect to see a positive correlation in the scatter diagram, but we do not. Whereas if EU migrants do depress wages, this would dampen the positive relationship and possibly result in no correlation at all. Which is what we see in the chart.

Now Van Reenen and his co-authors are all excellent econometricians so they all know this kind of argument perfectly well. Which makes their arguments all the more disingenuous. I’m not claiming that this proves there has been a serious impact on wages. There has been plenty of more sophisticated research which suggests it is hard to find an impact either way (and which Minford acknowledges in the quote above). But that does not in itself prove the argument wrong.

What about hospitals and schools? Well here the Remain argument is on the face of it much stronger. Van Reenen and others have shown that EU migrants are pretty clearly net contributors to the public purse. But the only problem with this argument to the UK-born worker is that there is no direct observable impact of these higher tax receipts on hospitals and schools. We do not have labels on CT scanners or smart whiteboards saying “these facilities were paid for using the extra tax receipts from EU migrants paypackets”. All they can see is the queues and the letters assigning their child to a school two bus rides away.

And finally, of course, housing. Well here of course, all the economists agree. And the policymakers. Everyone agrees. Absolutely everyone. We must build more houses.

But we don’t. Or at least not enough. Nor have we, for decades. As a result, UK households spend more on housing, per square metre of residential land, then any other European country except Luxembourg (See Footnote 3).

Does EU migration make things worse? Well of course it must do. (Even Nigel Farage can be right once in a while.) The CEP paper documents that the number of EU migrants in the UK rose by 2.4 million between 1995 and 2015. That accounts for roughly one third of the total growth of population in the UK over that period. And meanwhile, as Bank of England governor Mark Carney pointed out back in 2014, the UK builds half as many houses each year as Canada despite having twice the population.

No one disagrees that this is crazy. Yet neither the government nor the opposition have made any move to do anything serious about it. Despite the fact that bringing down the cost of housing could be the most effective way (and possibly the only effective way) of raising living standards for UK workers in the medium to long term.

But don’t get me started on housing. It is a serious, a very serious problem, that goes way beyond arguments about Brexit. But, I reiterate, EU migration must be making it worse.

Does all of this mean that I think we should stop EU migration? (Even if we could, which is of course debatable, even post-Brexit). It does not. Despite the fact that, as I noted at the start, my personal interests coincide with my professional judgement, I stick with that judgement. The EU brings benefits. EU migrants bring benefits. To me, and people like me, especially. To the economy on average, almost certainly. But not to everyone.

Pro-Remain policymakers need to start thinking fast about acknowledging this, and how to offer something to the poor and dispossessed of this country to compensate them explicitly for the costs of EU migration. This would not be impossible: remember the last-ditch crossparty promises before the Scottish vote? Maybe these made a difference, maybe they didn’t. But it is worth a try. Very soon it will be too late.

Find out more

Courses at the Department of Economics, Mathematics and Statistics

Images sourced from Wadsworth, J., Dhingra, S., Ottaviano, G., Van Reenen, J., and Vaitilingam, R. (2016) ‘Brexit and the Impact of Immigration on the UK’. CEP BREXIT ANALYSIS NO. 5. Available online, last retrieved 13 June 2016.

This post represents the views of the author and not those of Birkbeck

Footnotes

  1. “Brexit and the Impact of Immigration on the UK”, Jonathan Wadsworth, Swati Dhingra, Gianmarco Ottaviano and John Van Reenen, CEP Brexit Analysis No. 5.
  2. The CEP document shows that the fall for those on the 10th decile has been somewhat larger, and started
    earlier.
  3. De La Porte Simonsen, L and Wright, S (2016) “Residential Land Supply in 27 EU Countries: Pigovian Controls or Nimbyism?, paper presented to Birkbeck Centre for Applied Macroeconomics Annual Workshop, May 2016.
. Read all 10 comments . Category: Business Economics and Informatics, Uncategorized . Tags: , , , ,

National Living Wage: From Classroom to Newsroom

How teaching from a Birkbeck BSc Economics module ended up in the FT

mouse and ftOn 1 April, 2016 The Financial Times reported the results of a survey of UK economists on whether the government’s new national living wage would do Britain “more harm than good” (against) or “more good than harm” (for).

Professor Stephen Wright, of Birkbeck’s Department of Economics, Mathematics and Statistics, was one of four UK economists whose views were quoted at some length in the article. He has since published his comments in full on his personal web page.

“It was good timing” said Professor Wright. “When I got the email from the FT, a few weeks back, it was the day after I’d delivered a lecture on exactly this topic, so I had all the material to hand”.

The lecture Professor Wright had just given was for the module, “Current Economic Problems”, given to 1st year undergraduates on Birkbeck’s new BSc Economics programme, which admitted its first students in 2015/16. Students receive a lecture on a particular economic problem one week, and then, the following week, are required to give a presentation on some aspect of the problem, speaking on one side of a debate.

As well as helping to improve students’ communications skills, the module is also intended to show students that the economics they learn from textbooks and in lectures can be applied to practical problems faced by policymakers. Other topics covered in the module this year include immigration, “Nudge”, inequality and the gender pay gap – but topics will change every year depending on what is in the news.

Prof. Wright concluded that, on balance, the national living wage could prove harmful – but with the caveat “that the harm may well be as much from muddying the water as from the actual economic damage done.”

Predicting the impact

Working under the premise that the Chancellor of the Exchequer, George Osborne, believes the corporate sector (or more precisely, the low wage corporate sector) should share some of the burden of mitigating poverty, Prof. Wright concluded that basic economic analysis suggests it unlikely to work as advertised: that“…ultimately consumers of goods and services produced by the low wage economy will pay.”

He argued that the most optimistic perspective you can put on this outcome is that such consumers are possibly less likely to come from the lower end of the income distribution, thus if there was zero impact on employment in the low wage sector, the policy would be mildly redistributive. However, if unemployment in the low wage/low productivity sector increases, this effect would be offset.

Acknowledging that the evidence for adverse employment effects of minimum wages is “pretty muddy”, Prof. Wright goes on to explain that, on the basis of standard textbook models, the extent of any employment losses in the low wage sectors will depend on the elasticity of demand for their goods and services. Indirectly the evidence seems to be quite strong that in the long term these effects can be quite large (viz, for example, the steady fall in the number of pubs in the UK, as drinking in pubs becomes progressively more expensive relative to competing activities).

“If the existing low wage sector contracts it is not clear where those working in it (who typically have low productivity and skills to match their low wages) will go to work instead. But just as important I believe, is that these policies muddy the water. Wages are a very blunt instrument to tackle poverty.”

Case study: The London Living Wage

To demonstrate this, Prof. Wright cites the Greater London Authority (GLA)’s calculations of the London Living Wage (“A Fairer London: The 2015 Living Wage in London”). When the GLA calculated living wages ‘bottom-up’ by looking at the consumption needs of different household types, they got very different answers for different households. Indeed, the small print of the GLA calculations show that, given the current system of benefits, their calculated living wage for a family of two working parents is actually below the current minimum wage.

Drawing from this, the FT quoted Prof. Wright’s key conclusion, that “…a single Living Wage, built up from consumption needs, is not a logical construct: if it had any basis at all it should be a set of living wages, for different household types (but with the bizarre implication that, in the current benefit regime, having children would result in a reduction in the relevant Living Wage).”

“My personal view is that poverty reduction for those in work can be, should be, and already is carried out by government benefit policies. The tax credit system was one of the great unacknowledged success stories of Gordon Brown, and I’m pretty sure that it has been the primary factor behind our sustained low unemployment rate, and the resilience of employment during the recession. It seems a shame to start to throw this away just as it has really proved its value.”

Birkbeck is known to provide the highest quality teaching, which can be applied to the workplace. For BSc Economics students on this occasion, what Prof. Stephen Wright was teaching them went from their classroom to a highly respected media publication.

All enrolled students in the School of Business, Economics and Informatics at Birkbeck, University of London can subscribe to FT.com for free through the Birkbeck e-Library.

Further Links:

. Reply . Category: Business Economics and Informatics, Uncategorized . Tags: , , , ,

Addressing the skills gap through partnerships between education and business

This post was contributed by Elena Georgalla, Work Readiness Programme Officer at Birkbeck. Elena’s article follows the recent roundtable discussion (hosted by the college’s Careers and Employability team) which explored cross-industry perspectives on the skills gap and social mobility

Universities and businesses alike suffer from the skills gap. Working closer together can have transformative potential.

 

Mind The Gap Logo by rrward on DeviantArt

Mind The Gap Logo by rrward on DeviantArt

The perceived growing gulf between the skills and abilities the workforce offers today and the skills and abilities businesses consider crucial to their success – the so-called skills gap – is old news to the UK job market.  Although its severity and extent remain highly contested, often distorted by politically-loaded debates on immigration and Tier 2 Visas, the overwhelming consensus among employers is that there is a deficit in graduates’ ability to communicate effectively and to solve problems creatively, to think critically, to work collaboratively and to adapt to changing priorities.

Further to these “soft skill” shortages, businesses report that job seekers also lack the technical “hard” skills, associated with specific jobs, including, most alarmingly, key digital skills. The latter has given rise to a wide range of public and private sector initiatives to inspire more young people to take up STEM subjects. As universities and businesses alike are affected by the skills gap, joining forces could have a transformative potential.

Universities and employability

Education has been quick to receive the blame. Despite the UK’s massive expansion in university education – 2015 saw a record number of undergraduates admitted to British universities – no parallel increase in skills has occurred as a result. Universities are at a watershed; their perceived value is reducing as they are faced with challenges that are intensified by burdensome tuition fees and a policy shift that favours apprenticeships for school-leavers to recalibrate the apparent skills malaise.

At a recent roundtable discussion organised by Birkbeck, University of London, chaired by Prof Philip Powell, Pro-Vice Master for Innovation, senior decision makers and university recruitment managers from some of the UK’s largest graduate employers questioned the role of university education as a sufficient indicator of a candidate’s potential. More often than not, they would favour a strong track record of work experience over academic achievement.

Are universities then in danger of becoming redundant if the norm of a university degree being the golden ticket to employment no longer stands? Is work experience a better indicator of ability than an undergraduate degree let alone a postgraduate one? Should more school-leavers consider alternative routes to employment, such as well-remunerated apprenticeships with clear progression paths, rather than three or four years of study followed by many years of paying off student debts and no correlated career outcomes?

It’s time for universities and employers to come together.

Addressing the skills gap

A growing number of universities have been responding to these questions by establishing direct partnerships with businesses in a variety of ways to take direct action towards addressing the skills gap and at the same time avoiding the bleak scenario of the overqualified unemployed graduate.

Indeed, the best universities for graduate employment have one thing in common: strong employer presence on campus. This, in tandem with academic excellence and playing to the strengths of each institution, appears to be a good recipe for success. This was certainly the overwhelming view of our roundtable participants who admitted that, empirically, the most successful candidates come from universities that excel at building partnerships with employers, increasing employer presence on campus, embedding employability in the overall student experience, and crucially, working with businesses to design academic curricula.

Apprenticeships have a key part to play in this model; there is large scope for universities to work with employers to establish high quality degree apprenticeships that allow students to gain a university qualification and invaluable (paid) work experience. Birkbeck, being London’s original evening only university, is currently exploring a day-apprenticeship/evening-study model. Overall, as employers demand more from their graduates with the modern job market increasingly requiring employees to be forward-thinking, problem-solving and entrepreneurial, it is clear that constructive dialogue, ground-breaking initiatives and a common, mutually-reinforcing approach between universities and business is the best solution.

There is an abundance of case studies demonstrating the importance and success rate of such university-business synergies. But to be truly successful, such partnerships need to go beyond the usual talent scouting and guidance on dealing with interviews and over-demanding assessment centres. They also need to focus on issues that can bring about genuine long-term change: social mobility, diversity and dealing with the chronic lack of women in technology. Such a focus is to the advantage of both sides because failing to tackle these issues will only compound the skills gap if fewer people are able to meet their full potential. Whatever the relationship that universities and businesses build, it ought to be reciprocal, mutually-reinforcing, sustainable and must speak to the needs of both sides.

Work Readiness: J.P. Morgan case study

At Birkbeck, we partnered with J.P. Morgan to launch the Work Readiness Programme, an initiative targeted specifically at students from underrepresented backgrounds, which aims to enhance social mobility and promote diversity in the job market, specifically in technology. Birkbeck prides itself on the diversity of our student body and on our reputation as an inclusive institution. J.P. Morgan has identified work readiness and social mobility as their top community engagement priorities. At the same time, Birkbeck has a campus in East London home to J.P. Morgan’s largest UK operation.

The reasons to join forces are evident. Since its launch, the programme has been very well-received among students and employers alike. On the one hand, employers see the value the programme adds to their efforts to become more inclusive and diversify their workforce; it speaks to real needs. On the other hand, our students have benefitted immensely from interacting with employers on campus and creating their own informal networks, whilst it has given our Career Service the opportunity to veer away from dull traditional career support limited to CV checks and “I’m not sure what I would like to do” conversations. In addition, we are soon to announce a partnership with TechCity UK which aspires to bridge the digital skills gap.

A collaborative approach

University education has a key role to play in driving the success of UK business. But in order to remain relevant, institutions must adapt. Universities are discovering the importance of increasing their collaboration with businesses beyond applied academic research and into preparing graduates for the world of work.

This, of course, does not absolve employers from their responsibility to provide training and opportunities for up-skilling. As emphasised, collaborative approaches should bear something for both sides. Most crucially, both sides should be willing to break the mould and innovate. Ideally, such partnerships should be focused around creating flagship initiatives, with a clear manifesto, well-defined aims and objectives, a robust structure and a progression plan.

Equally, there are many areas that still remain to be explored. Employer engagement in education provision (course development and delivery) for example, is still in its infancy and there is a lot more to be understood and to be implemented. Degree apprenticeships are another area with great potential to transform not only the university experience but also how people progress from education into work.

Finally, the true potential of employer-education partnerships does not solely lie in their ability to nurture super-graduates who are client-friendly, critical thinkers and also experts in Excel, Python and Matlab; it rests in the recognition of the potential to create real societal change and opportunities for everyone.

Find out more

. Reply . Category: Business Economics and Informatics, Uncategorized . Tags: , ,