7 November, 2016

Not our GDP? Learning from Brexit about inclusive economic growth

British and EU flags
by Ian Bretman

Ian Bretman has worked with the Fair Trade movement for more than 30 years. Here he shares his thoughts on what the vote to leave the EU might be telling us and why we need trade and business which works for everyone.

The repercussions of the vote for Britain to leave the EU are still in their early stages so we don’t really know the whole story of why people voted as they did. It does seem, however, that the Leave vote reflected a widespread disenchantment with the impact on families and communities of a model of global free trade that was seen as intrinsic to the EU.

This is not news to those of us in the Fair Trade movement as we have long argued that trade is not just an economic exchange of goods or services, but a social activity that needs to work first and foremost for people. So, as we seek to come to terms with Brexit and try to secure positive change to both Britain’s and Europe’s future trade policies, perhaps our vision of trade as a “partnership based on dialogue, transparency and respect that seeks greater equity…and…contributes to sustainable development” can help to unite both Leavers and Remainers.

Neither is it news to Fair Traders that trickle-down economics doesn’t work. The referendum surely demonstrated the importance of what the SDG’s refer to as “inclusive economic growth” or as Theresa May calls it “an economy that works for everyone”. A few days after the referendum, Anand Menon, a professor at King’s College London, wrote about when he realised that the Remain campaign would lose. He reported being heckled at a public meeting in Newcastle-upon-Tyne while explaining that in the view of the vast majority of economists, Brexit would lead to an economic slowdown. A two percent drop in the United Kingdom’s GDP, he said, would dwarf any savings the country would generate from curtailing its contribution to the EU budget. “That’s your bloody GDP,” came a shout from the audience, “not ours.”

This disconnect between national economic statistics and what individuals and families feel in their day-to-day lives can be seen in many of the places that voted Leave most heavily. Stoke-on-Trent had one of the largest Leave majorities in the country with 70% in favour. Stoke’s economy has been transformed over the last 40 years (coincidentally the period in which Britain has been an EU member). At the start of that period, potteries and steelworks were the largest employers and they provided a reliable entry route into work for young people, even those with few or no qualifications, and the expectation of a job for life. Today, many of those unskilled or semi-skilled manual jobs have disappeared and while pottery companies like Wedgwood and Royal Doulton are still there, most of their products are imported from Asia. In their place, the growth areas for jobs have been at entry level in tourism, leisure and food & drink. The largest employer in Stoke today is the Bet365 Group.

Stoke typifies what is described as a “hollowing-out” of work, with traditional well-paid jobs being displaced by temporary, part-time and low-paid work at one extreme and high-level technical work at the other – but with the former far outweighing the latter. So if you leave school in Stoke with no academic qualifications (like 20% of the adult population) the future looks fairly bleak – and significantly worse than it did for your parents or grandparents. And you have lost not just the livelihood you expected but also a big part of the identity that defined people in your community. Of course, some change in employment was inevitable as a result of the advance of technology and changing lifestyles but we can also see where a dogmatic approach to free trade that simply left those changes to be decided by the market has led us.

There was a time when the Adam Smith Institute or a like-minded group would put out a report around Fairtrade Fortnight criticising the movement’s support for small-scale coffee farmers in countries like Guatemala or El Salvador. We were derided for encouraging rural families to stay in a declining business that supposedly kept them trapped in poverty instead of recognising the inevitability of market forces. The fact that these families wanted to stay on their land and in their communities and keep something of their traditional way of life (and actually grew some damn fine coffee as well!) did not feature in the free trade model – but it was central to their engagement in Fair Trade.

It shouldn’t be a surprise to our movement that people want the same things from their work whether they live in Managua or Manchester – as well as money, they also want dignity, fulfilment and a sense of identity. As Brexit becomes a reality let’s hope that Theresa May’s ambition for Britain to be “the world’s leading advocate for free trade” takes account of the lessons from places like Stoke and ensures that this doesn’t just work for business at the global or national level but also delivers for people and families in every town and city in Britain.

Ian Bretman is a member of the Board of Fairtrade International and has worked with the Fair Trade movement for over 30 years. He was Deputy Director of the Fairtrade Foundation from 2001 – 2008.

Originally published by Traidcraft on 'Traidcraft in Depth'

Photo: Rich Girard CC-BY-SA 2.0

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