Economics

[Snooky]

The EU has provided us with workers willing to work for low wages, this in turn reduces productivity. There may be short term pain but the long term gains are worth it. Higher productivity and automation will provide more higher worth jobs.

I'm not an economist and I'm fairly thick. So could you explain in more detail:

• how workers on low wages reduces productivity?
• how higher productivity and automation will provide more higher worth jobs?

I'm completely serious, no doubt I'm missing something but I don't understand how higher productivity and automation for a particular farmer or company will result in any higher worth jobs. ELI5 please.

[WTFH]

The EU has provided us with workers willing to work for low wages, this in turn reduces productivity.

How does “The EU”, “Willing workers” or “Low wages” reduce productivity?

[Gibbon]

How does “The EU”, “Willing workers” or “Low wages” reduce productivity?

Depressed wages do not provide an incentive for investments in technology and thus can hamper future productivity growth, and actually becomes a low wage trap. A shortage of labour will either increase wages or result in investment in technology.

[WTFH]

A shortage of labour will either increase wages or result in investment in technology.

A shortage of labour will increase costs, impacting profits. It may also reduce production, which will also impact profits.

The length of time that profits are impacted depends on how quickly solutions are found and how expensive they are, or how high the minimum wage needs to rise.

Investment in technology requires the tech to exist, the capability to manufacture it, run it and maintain it and the resources to back it, without asset stripping/selling it off to foreign investors at the earliest opportunity.
If the tech doesn’t exist, then the investment has to be in education and people. That pushes the timescales out.

[Gibbon]

A shortage of labour will increase costs, impacting profits. It may also reduce production, which will also impact profits.

The length of time that profits are impacted depends on how quickly solutions are found and how expensive they are, or how high the minimum wage needs to rise.

Investment in technology requires the tech to exist, the capability to manufacture it, run it and maintain it and the resources to back it, without asset stripping/selling it off to foreign investors at the earliest opportunity.
If the tech doesn’t exist, then the investment has to be in education and people. That pushes the timescales out.

Erm 'Necessity being the mother of invention'. Anyway for our raspberry farmers the tech does exist, but why make a capital investment when you can get cheap labour.

[darmstadt]

The EU has provided us with workers willing to work for low wages, this in turn reduces productivity. There may be short term pain but the long term gains are worth it. Higher productivity and automation will provide more higher worth jobs.

Would they come from the 'Immigrant Mountain' or the 'Immigrant Lake'?

[meridian]

Erm 'Necessity being the mother of invention'. Anyway for our raspberry farmers the tech does exist, but why make a capital investment when you can get cheap labour.

Define “cheap labour”. There’s already a fixed minimum wage, set by the U.K. government. How much higher do you think the base rate of wage for skilled raspberry pickers should be before it becomes uneconomic to pay for manual labour and economic to invest in other tech?

As I’ve said, your theory may be sound in theory, but in practise requires a shortage of labour to drive up wages above the statutory minimum before tech investment becomes viable. Before that happens, prices will rise and growers will go out of business until another equilibrium is reached.

[Gibbon]

Define “cheap labour”. There’s already a fixed minimum wage, set by the U.K. government. How much higher do you think the base rate of wage for skilled raspberry pickers should be before it becomes uneconomic to pay for manual labour and economic to invest in other tech?

As I’ve said, your theory may be sound in theory, but in practise requires a shortage of labour to drive up wages above the statutory minimum before tech investment becomes viable. Before that happens, prices will rise and growers will go out of business until another equilibrium is reached.

'skilled raspberry pickers' ? I used to do it in the school holidays, no skill required.

Wage increase is only one factor, at the moment its cheap enough not to invest, even though investing would in the long term make more sense.

The business' should see this coming and the ones that do will survive, yes the others will go under or adapt, that's how progress works, not everyone doing the same thing they've always done. Progress requires some chaos and churn.

“You know what the fellow said – in Italy, for thirty years under the Borgias, they had warfare, terror, murder and bloodshed, but they produced Michelangelo, Leonardo da Vinci and the Renaissance. In Switzerland, they had brotherly love, they had five hundred years of democracy and peace – and what did that produce? NAT.”

― Graham Greene, The Third Man

[meridian]

'skilled raspberry pickers' ? I used to do it in the school holidays, no skill required.

Wage increase is only one factor, at the moment its cheap enough not to invest, even though investing would in the long term make more sense.

Exactly my point. It’s minimum wage work and is unlikely to ever be more than that. Brits won’t do it. And while it’s minimum wage work with enough foreign temporary workers to do it, there’s little incentive to change.

Remove the workers, and either wages need to go up to attract pickers, or product goes to waste on the ground. Either way, as I said, an increase in prices and growers going out of business.

The business' should see this coming and the ones that do will survive, yes the others will go under or adapt, that's how progress works, not everyone doing the same thing they've always done. Progress requires some chaos and churn.

I don’t disagree, they will be slow to react and spend more energy in trying to retain the status quo rather than investigating and implementing alternative solutions.

What I’m trying to get at in this thread, though, is that change will need to be systemic to avoid short-term issues - employees, growers, tech providers, supermarkets, etc will all face short term challenges if the government shuts off the base supply of workers with no transition to allow people to adjust.

[Gibbon]

What I’m trying to get at in this thread, though, is that change will need to be systemic to avoid short-term issues - employees, growers, tech providers, supermarkets, etc will all face short term challenges if the government shuts off the base supply of workers with no transition to allow people to adjust.

I agree, but I doubt it will bear fruition