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Home News The rise of the service economy: future jobs and wealth creation

The rise of the service economy: future jobs and wealth creation

09 May 2014
The rise of the service economy: future jobs and wealth creation

Over the past four decades the mature developed economies - in Europe, North America, and Australasia - have faced massive structural change. Industrial production, which was once the economic backbone of these economies, has shrunk, while the service sector has taken over as the primary engine of output and employment expansion. Understanding this shift is vital for the development of progressive capitalism and centre-left political economy.

Writing for Policy Network on the political economy of service transition, Anne Wren of Trinity College Dublin highlights how in all countries (even an industrial powerhouse like Germany) the proportion of the working age population finding employment in traditional sectors has steadily declined. The implications are that deindustrialised countries must rebuild their traded and export-led sectors, using the fruits of growth to provide high quality public services. This will require dynamic changes in education policy and women’s participation in the labour market.

Rob Atkinson of the Information Technology & Innovation Foundation follows this up by arguing that the US and Europe are suboptimal innovators. 21st century progressive politics has to improve policies to drive innovation and productivity and must learn how to live with creative destruction if we are to avoid falling behind.

Finally, Lane Kenworthy of the University of Arizona calls for progressives to embrace low-end service jobs. He argues that ‘while robots and 3D printers may enable continued production of manufactured goods in affluent countries, they won't alter the downward trend in manufacturing employment. In most of these countries, manufacturing will account for fewer than 10% of jobs within a few decades.”
This series builds on from the Policy Network paper 'A Progressive Economic Strategy: Innovation, Redistribution and Labour-Absorbing Services' by Wendy Carlin.

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