Deindustrialisation and the Balance of Payments

Abstract

Over the last three decades, the United Kingdom has been experiencing a severe process of deindustrialisation measured by the relative and absolute loss of jobs in industry. A relative decline in the share of industrial employment in total employment has been a common occurrence in other advanced industrialised countries but the absolute loss of jobs in the UK started sooner, and has been more severe, than anywhere else in the world. Industrial employment peaked in 1966 and since then four million jobs have been lost in manufacturing and nearly five million in industry (which includes mining, construction and public utilities). In 1966, the level of industrial employment was 11.5 million, today it is 6.6 million; the level of manufacturing employment was 9.1 million, today it is 5.1 million. All industries have been affected and all regions of the country. By contrast, in countries such as Canada, the USA, Japan and Italy, manufacturing employment was increasing in the 1960s, 1970s and 1980s. Belgium, France, Germany and Holland have experienced job losses in industry, but not to the extent of the UK. A comparison of the experience of the OECD countries in recent years is shown in Table 15.1.

This chapter draws heavily on Thirlwall (1982b and 1983) and Bazen and Thirlwall (1989).