'Real engineering' needs real support from Government

Written by: Graham Pitcher | Published:
When you use the phrase "labour shortage" or "skills shortage" you're speaking in a sentence ...

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The Hinton Lecture is one of the Royal Academy of Engineering's prestige events. This year, the lecture was given by industry secretary Lord Mandelson, who used the opportunity to call for more 'real engineering'.

To a certain extent, Lord Mandelson is pushing an open door. There is general acceptance that the UK needs to decrease its reliance on the services sector and rebuild its manufacturing and engineering base.

Interestingly, Lord Mandelson acknowledged that 'there is a germ of truth to the fact that, in our country, a lot of money has been put into the money industry over the last decade, when it might have been used to make things'. Some might take a stronger view of that assessment.

It has been almost the de facto position for Governments over the past 25 years or so; to regard manufacturing and engineering as yesterday's industries and services as the way to go.
At last, it appears this Government has finally understood the importance of engineering and manufacturing to the UK economy. Some may say this has come too late.

At the same time we need to boost UK engineering, there's a massive technical skills shortage and it's becoming ever harder to encourage students to become engineers. The Government is aware of this and has announced a number of measures to address the problem, and we are assured it will be announcing more.

Unfortunately, it will take some time – a generation in some instances – to undo the damage.


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Comments
When you use the phrase "labour shortage" or "skills shortage" you're speaking in a sentence fragment. What you actually mean to say is: "There is a labour shortage at the salary level I'm willing to pay." That statement is the correct phrase; the complete sentence and the intellectually honest statement.

Employers speak about shortages as though they represent some absolute, readily identifiable lack of desirable services. Price is rarely accorded its proper importance in their discussion.

If you start raising wages and improving working conditions, and continue doing so, you'll solve your shortage and will have people lining up around the block to work for you even if you need undesirable functions performed.

Re: Shortage caused by employees retiring out of the workforce: With the majority of retirement accounts down about 50% or more, most people entering retirement age are working well into their sunset years. So you won't be getting a worker shortage anytime soon due to retirees exiting the workforce.

Okay, fine. Some specialised jobs require training and/or certification, again, the solution is higher wages and improved benefits. People will self-fund their re-education so that they can enter the industry in a work-ready state. The attractive wages, working conditions and career prospects of technology during the 1980s and 1990s was a prime example of people's willingness to self-fund their own career re-education.

There is never enough of any good or service to satisfy all wants or desires. A buyer, or employer, must give up something to get something. They must pay the market price and forego whatever else he could have for the same price. The forces of supply and demand determine these prices - and the price of a skilled workman is no exception. The buyer can take it or leave it. However, those who choose to leave it (because of lack of funds or personal preference) must not cry shortage. The good is available at the market price. All goods and services are scarce, but scarcity and shortages are by no means synonymous. Scarcity is a regrettable and unavoidable fact.

Shortages are purely a function of price. The only way in which a shortage has existed, or ever will exist, is in cases where the "going price" has been held below the market-clearing price.
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