A burgeoning neo-liberal ideology in the shape of Thatcherism emancipates capital between 1990 and 2007 and converts London into an economy dominated by banking, insurance, real estate and services.
Services account for over 90% of London’s economy in the second decade of the 21st century. Technology, media and communications grow steadily, writes Paul Coleman. Financial technology – ‘fintech’ – employs a growing number of people applying new technology to finance and banking.
Midway through the second decade of the 21st century, nearly 20% of working Londoners work in finance and insurance, despite the bank-led financial ‘meltdown’ of 2007-09.
Almost 10% of Londoners work in real estate, reflecting London’s overheating property market and the sell-off of publicly owned land, and the demolition and developer-led ‘regeneration’ or replacement of council estates with mainly private luxury housing.
Over 8% work in retail and wholesale, reflecting London’s consumer culture.
Thousands of Londoners lose their jobs in the wake of the bank-led financial meltdown of 2007-09. Many Londoners start their own enterprises, often engaged in two or more sectors, taking advantage of shared offices, multiple unit workshops and business start-up ‘incubators’.
Londoners work in the following sectors:
- finance and insurance (19.8%)
- professional, scientific and technical (11.7%)
- information technology and communication (11.6%)
- real estate (9.8%)
- wholesale and retail (8.3%)
- adminstration and support services (5.4%)
- health and social work (5.3%)
- education (4.7%)
- construction (4.5%)
- transport and storage (4.3%)
- public administration and defence (3.9%)
- hotels, restaurants and food (2.6%)
- manufacturing (2%)
- arts (1.7%)
- primary and utilities (1.6%)
- other service activities (1.6%)
Source: Office for National Statistics
Makers and providers
New quieter, cleaner and cheaper manufacturing processes harbour a potential growth in London’s new manufacturing – but investment in these new areas is patchy and unplanned. Only 2% of Londoners work in manufacturing in the second decade of the 21st century. They work in large-scale food processing and for smaller-scale enterprises, such as bicycle manufacturing and making taps for kitchens and bathrooms. These companies cluster in industrial estates and business parks such as Park Royal, the Lea Valley and the A13 ‘corridor’.
Equally, the much-vaunted ‘death of the office’ has not led to a resurgent availability of former offices that can be converted into workshops for new, small businesses and social enterprises.
Hundreds of thousands still commute to offices in London’s ‘central activity zones’. Work still has not yet left the building.
In these buildings, many Londoners face worsening job insecurity and stagnant pay. Many others have simply become disillusioned with their jobs and career prospects.
Thousands of Londoners now work as self-employed, taking advantage of home technology and pursuing their wish for a better work-life balance. They embark on parallel or new careers as makers of goods and providers of services on smaller scales. Many make greater amounts of smaller batches of customised products, often from rented small workshops in courtyards, mews, warehouses and disused factories.
They produce food products, jewellery, ceramics, crafts, flowers and clothing. They sell these goods at London’s plethora of street markets, such as:
- Borough: food, drink
- Brick Lane: clothes, food
- Petticoat Lane: clothes
- Colombia Road: flowers
- Camden Market: crafts, clothing, food and jewellery
Areas associated with makers, older and newer, include:
- Broadway Market: bread
- Finsbury Park: smoked fish
- Hackney Wick: arts, crafts
- Hoxton/Shoreditch/Old Street: software, computer gaming, new media & communications
- Savile Row: tailoring
- Tottenham: beer, cheese
- Wood Green: arts, crafts
But the demand by developers for luxury housing in London threatens potential and existing industrial space. Landowners and developers see housing as more lucrative. Private housing developers swallowed about 50% of London’s industrial premises and land in the first decade of the 21st century. ‘Tech City’ (Hoxton/Shoreditch/Old Street) grows from 15 companies in 2008 to over 1,000 in 2016 but many face rising rents.*
Only 50% of industrial land in London is protected with a strategic designation. London loses 500 of its 6,950 hectares of land used for industrial production between 2010 and 2015. Industrial land seems regarded as inherently pollutive and dirty.
A 10% average annual rental rise across central London hampers small and new enterprises in 2016. Small and medium enterprises struggle to afford commercial space rents in the City of London, West End, Clerkenwell, Aldgate, Spitalfields and Whitechapel. (Central London Markets, Q1 2016, Cushman & Wakefield, London, 2016).
Londoners who started their working lives between 1996 and 2016 are told by economists they can expect to work in up to 30 places during their careers, compared to the four or five workplaces by earlier generations. This reflects technological developments. Platform companies harness mobile broadband, Global Positioning System and online payment technology to get their workers to transport people and to deliver goods. Algorithms track and anticipate demand.
London is one of the world’s biggest markets for platform companies that use digital technology, especially smartphone apps. Londoners do a greater share of their shopping online than almost anyone else in the world. The penetration of smart phones and tablets amongst Londoners underpins much of this growth. Online sales could reach £63 billion by 2020, according to forecasts.
For instance, lorries can deliver goods to Londoners from Amazon’s huge warehouses in the middle of England within a day. British retailers dispatch some 1.2 billion parcels in 2016. E-retailers compete vigorously on delivery times and windows. This technology-driven convenience for consumers comes at a price. Lest it be forgotten, consumers are also workers. Many now try to make ends meet in a corporate-dominated economy of unstable work patterns that are increasingly flexible, ad hoc and temporary, such as work offered on zero hours contracts in the so-called ‘gig’ economy.
Companies that operate in the ‘gig’ economy basically transfer their capital investment risk to their workers. Derided as ‘wimp capitalists’ operating a form of ‘gutless capitalism’, these companies refuse to pay their staff when profits fall or demand for their goods or services evaporates. It also helps companies to avoid the risk involved in employing permanent staff, even though the minimum wage is set at £7.20 an hour, an paltry impoverished level when set against the real cost of living. The almost prohibitive cost of London housing and rising prices for energy, transport and food make it economically and socially imperative to replace the bare minimum wage with a real living wage.
New platform companies profit from using ‘gig’ workers as single person ‘providers’ or ‘contractors’ rather than as employees legally protected by employment rights, guaranteed minimum wages and working time limits.
‘Gig workers’ or contractors often say they benefit from flexibility provided by such platform companies, such as Amazon, Uber and Deliveroo. But some have successfully challenged such companies in the courts to provide sick leave and paid holidays. Taxi app firm Uber loses a landmark case in 2016 when a judge rules it must class drivers as workers. A BBC TV investigation accuses Amazon of paying less than the legal minimum wage (£7.20 per hour if aged 25 and over at the October 2016 rate).
Gig economy companies contend consumers benefit from lower prices. They claim consumer safety issues – ‘contractors’ experience, possible criminal records, background checks and facial recognition – remain marginally important.
Online retailers – such as Tesco, Morrison and B&Q – congest roads with their delivery vans. Drivers work long hours for low pay. The legal limit is 11 hours per day. Drivers classified as self-employed are not entitled to the minimum wage or employment rights. Companies even hope driverless vehicles in the future can help them drive down costs and raise profits even further.
It is not clear if the digitally driven platform provider ‘gig economy is a fleeting fad or an enduring new paradigm. But what seems to be clear by 2016 is that these platform companies use digital technology to aggressively stave off or to absorb competition, creating single provider monopolies in these industries rather than thousands of flourishing smaller businesses. These companies – and the opportunities they pursue – increase pressure to stagnate and even to lower wages across rest of the world of work.
Younger Londoners of working age are also told they can expect to retire at around 80 years-old. Translated from Orwellian, this means many Londoners can expect to work until they drop.
The reindustrialisation of London – to be sustainable – will need to be based on proper pay, conditions, retirement provisions and pension guarantees.
© London Intelligence