Mark Hillsdon reports on a new index from the Good Economy Partnership that assesses UK’s biggest companies on their creation of ‘good jobs’
An inclusive economy where the benefits of economic growth are evenly spread across the country is the goal of many of the world’s most developed nations.
It’s one to which the UK aspires, too. But rather than taking a path to “inclusive growth”, social advisory firm The Good Economy Partnership suggests that Britain is actually experiencing “immiserating growth”, a concept associated with falling living standards, when the benefits of economic growth have not been equally shared.
We need to be able to measure the most important dimension of inclusion: a good-quality job for everyone who wants one
According to the Organisation for Economic Co-operation and Development (OECD) real wages in the UK are falling faster than anywhere else in the developed world, while the World Economic Forum’s Inclusive Growth Index, now ranks the UK 21st among advanced economies.
“If we seriously want to build an ‘inclusive economy’ – one that works for everyone – we need to be able to measure the most important dimension of inclusion: a good-quality job for everyone that wants one,” says Mark Hepworth, director of research and policy at The Good Economy.
Not only is capitalism in the UK producing low unemployment, but “the quality of the jobs is low as well,” Hepworth says, pointing out that vast areas of the UK show little or no, let alone inclusive, job growth. “Good jobs bring earnings quality, job security and work fulfilment. They are central to social and economic well-being.”
Hepworth, who has produced social impact assessments for several private equity firms, set up Bath-based The Good Economy Partnership in 2015 with his wife Sarah Forster, who helped to develop the social investment arm of the Big Issue, and led on developing the Threadneedle UK Social Bond Fund. The pair has come up with a new methodology to assess the inclusive job growth performance of companies, sectors and places in the UK.
Last month, they launched an index assessing the performance of 150 FTSE 350 companies using the methodology. Scottish utility company SSE, Yorkshire construction firm Persimmon and BT Group were the top three companies on the inaugural index, while oil and gas firm Cairn Energy, InterContinental Hotels Group and Man Group featured among the 10 at the bottom.
Perhaps most surprisingly, two UK companies that invariably top other sustainability rankings, Unilever and M&S, came mid-table in this one, at 71 and 78, respectively.
For a British company focused on the UK, it is absolutely in our interests that the country grows, particularly in the post-Brexit era
Sam Waples, head of data analytics for The Good Economy, points out both companies have experienced little jobs growth, lowering their scores. Unilever, while a Voluntary Living Wage employer, has a relatively low proportion of employees in the UK. M&S has a high proportion of employees in the UK, but does not have Voluntary Living Wage status.
The ratings are designed to allow companies to benchmark their performance and demonstrate their social value as an employer, Hepworth says. Policy makers, meanwhile, can use them to analyse business and sector contributions to inclusive job growth.
They also offer investors a new way to screen and select companies that could create good employment opportunities, as well as signposting what Hepworth describes as “cold spots”, where the social returns are highest.
The ratings assess Britain’s biggest publicly traded companies using indicators such as size and workforce growth, global turnover, regional distribution of employment and living wage employer status.
They also look at sectors, using measurements around growth, SME dynamism, and the representation of marginalised groups in workforces. This shows that the UK economy is tilted towards high-growth but low-inclusion businesses, and that a failure to re-balance this has resulted in low productivity and low good job creation.
Investing outside of London and the other economic hot spots in south-east England is crucial, says Hepworth, and it was the main reason utility company SSE came out top in the inaugural ratings.
For the UK to grow successfully that means getting growth to accelerate outside London
Rachel McEwen, director of sustainability at SSE, says that by investing in renewable energy projects, which are often located far away from traditional centres of economic development, the company is helping to create jobs in areas that need them most.
“For a British company focused on the UK, it is absolutely in our interests that the country grows, particularly in the post-Brexit era ... in a balanced, inclusive and fair way,” she says.
John Godfrey, corporate affairs director at Legal and General, which was placed 56 in the ratings, agrees on the importance of “place-based” investment. “For the UK to grow successfully it's got to be the whole of the UK. That means getting growth to accelerate outside London and the south-east.”
Putting investment into assets like green energy is vital. (Credit: artjazz/Shutterstock)
But the nature of investment is also important, he says. “There's more money available in the world for investment than ever before and you've got to put it into assets like infrastructure, housing, urban regeneration and green energy.”
The Good Economy Partnership is advocating for the development of sector clusters, "Made in Britain” supply chains and social enterprise programmes to help those in need enter the workplace.
The creation of workplaces, with decent pay, engaged employees, and an accent on diversity, could help increase labour and workplace productivity, too, and form an important building block of an inclusive economy, Hepworth argues.
It's refreshing to have a tool that focuses on quantifiable positive impact, rather than negative screens
The paper also advocates a new social contact between big business, government and communities that could build on emerging corporate and investor interest in the Sustainable Development Goals (SDGs), using them as a new rallying point.
Mark Evans, a member of Jupiter’s environmental and sustainability strategy team, says the new ratings will give investors access to financially useful data on the social impact of companies and sectors. “We believe it is very refreshing to have a tool that focuses on quantifiable positive impact, rather than negative screens, a trend we are ourselves pursuing within our strategy.”
Mark Hillsdon is a Manchester-based freelance writer who writes on business and sustainability for Ethical Corporation, the Guardian, and a range of nature-based titles including CountryFile and BBC Wildlife.
Main picture credit: SSE
This article is part of the in-depth briefing Future of Capitalism: See also:jobs inclusive economy The Good Economy Partnership World Economic Forum SDGs Legal and General Unilever Brexit voluntary living wage Marks and Spencer