The current simplistic approach to measuring economic growth has led to policy being narrowly focused on headline measures of economic activity rather than achieving positive economic and social outcomes for the population, says Graham Whitham.
Tomorrow, when the latest UK economic accounts are released for scrutiny, local planners and stakeholders will be keen to see what they tell us about the health of the economy, especially post Brexit. But what do such figures really tell us about the wellbeing of us all and what other measures should national and local policy makers take into account?
What is clear is that economic growth is not benefitting everyone, and I believe the emerging inclusive growth agenda has a significant role to play in helping us better identify the true health of our nation.
According to the OECD, inclusive growth is ‘economic growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity, both in monetary and non-monetary terms, fairly across society’. Thought is increasingly being given as to how this approach can be applied and monitored at a local level within the UK – particularly at a city region level through the Inclusive Growth Analysis Unit.
For instance, the Joseph Rowntree Foundation recently published an Inclusive Growth Monitor for measuring the relationship between poverty and growth. It aims to shape growth agendas in city regions by identifying strengths and weaknesses across key aspects of growth and inclusion and identifies measures of income, living costs and labour market exclusion under the theme of inclusion and output growth, employment and human capital under the theme of prosperity. The monitor makes best use of existing data, applying it at the city regional level and allowing for comparison between regions over time.
The Monitor complements Oxfam’s HumanKind Index which was informed by research undertaken with more than 3000 people and identifies measures of wellbeing and prosperity that take us beyond simple measures of GDP and towards a more sophisticated understanding of whether the economy is working for everyone.
Priorities and ‘local’ measures
The Index identified a number of different priorities ranging from living in a neighbourhood where you can enjoy going outside and having a clean and healthy environment, to having satisfying work to do (whether paid or unpaid) and having good relationships with family and friends.
It revealed that ‘local’ measures are essential to people’s ability to live well, particularly those relating to people’s immediate neighbourhoods. Local issues such as having facilities you need available locally; being part of a community; access to green and wild spaces; and living in a clean and healthy environment, contributed to 35% of the total weighting generated by the public consultation.
Work, income and wellbeing
In contrast, factors related to the economy (work, work satisfaction, having enough money and financial security) were relatively less important to those consulted. In total, these factors contributed about 22% of the total. Crucially, sufficiency and security of income were deemed more important than high income, and the satisfaction derived from work was identified as one of the most important factors in people’s ability to live well.
Similarly, Oxfam’s Decent Work research with low paid workers found that there were a multitude of factors that determine whether the economy is delivering positive labour market experiences to low paid employees. People want work that provides purpose and meaning, want supportive colleagues, and want to be free from discrimination. They also want paid leave and a safe working environment. All these factors help promote a sense of wellbeing.
The work of the New Economics Foundation (NEF) builds on the Humankind Index, proposing five areas against which the UK’s ‘success’ should be measured: good jobs, wellbeing, the environment, fairness and health. It is possible to envisage measures within these domains being applied locally and regionally as well as nationally.
In my view there is a strong case for bringing the Inclusive Growth Monitor and wider measures identified by Oxfam, NEF and others together. This would provide a significantly more holistic and representative measure of progress than simply looking at GDP/GVA or, for that matter, headline rates of employment and pay.
Devolution to English city regions also presents an opportunity to think again about how we shape economic and employment policy so that it promotes wellbeing and inclusion. Consideration should now be given to what existing data would help build up a full sense of whether the economy is resulting in positive economic and social outcomes for people.
We also need to look at whether data is robust at a local/regional level and what new evidence needs to be gathered to ensure that local policymakers can take these wider factors into consideration and be held to account.
A wider set of measures should be, at least in part, informed by participatory research that identifies the factors for ‘success’ that people say matter most to them.