An Industrial Policy for Hairdressing?

The recent revival of industrial policy in Britain and across much of the West has been driven by several forces. The hope of raising the stagnating trend rates of growth; the desire to build up new ‘green’ industries linked to the transition away from a carbon-based economy; and the ‘recapture’ of industrial jobs seen to have been lost in previous decades of fierce competition from Asia (especially China).

A veritable ‘reindustrialisation’ is envisaged by many. Such a prospect is attractive. Some expansion of employment in non-carbon energy generation and other industries that can reduce carbon usage is surely possible. But can it be on a scale to justify talk of ‘reindustrialisation’?

There are several reasons for caution. First, the experience so far in creating green jobs in Britain has been disappointing. In Scotland, for example, where the drive for renewable energy is most advanced of the four nations, the total number of manufacturing jobs (direct and indirect) is estimated at under 5,000 out of total renewables employment of around 43,000. So much of the renewables sector's expansion has been fed by imports.

But there is a more general issue. In the twenty-first century, deindustrialisation has become a global phenomenon – very powerful forces are at work. Even in a slow-growing country like Britain, manufacturing productivity has grown at a steady 4 to 5 per cent annually, making it possible to produce roughly the same amount of manufacturing output today as in the early 1970s (the twentieth century peak) with a fraction of the workforce.

Such a broad-brush view of the causes of deindustrialisation is in tension with the widespread belief that what has occurred is mainly the consequence of job losses resulting from Asian and especially Chinese competition in the last thirty years.

My approximate calculations show that even if it were possible to bring back all the jobs lost to Chinese imports, it would not lead to a substantial reversal of the long-run trend in industrial employment—and that is to ignore the other side of the balance sheet: the expansion of British manufacturing exports to China brought about by the country's growing prosperity. Barring some catastrophic economic reversal, the trend towards higher incomes and higher manufacturing labour productivity is set to continue. If reindustrialisation suggests any kind of reversion to employment levels of even, say, 5 million, this would be a doubling of the current level—a wholly implausible prospect.

Good jobs

Dani Rodrik has emphasised that, to restore the numbers of ‘good jobs’ that were lost in the process of deindustrialisation, the great bulk of these will come in the service sector.

Automation and labour-saving innovations have resulted in lower levels of job creation in advanced manufacturing sectors.

There have been hints at the importance of good jobs in Labour rhetoric, but discussion of the topic seems to be wholly distinct from discussion of industrial policy which is dominated by the objective of economic growth.

Why hairdressing?

Hairdressing is an important sector of the economy. The hair and beauty sector together employs at least 250,000 workers, with hairdressing around 200,000. Over 80 per cent of these workers are women, being an even higher percentage if part-time workers are included.

It is thus a sector which offers opportunities precisely to those who have been most disadvantaged by the postindustrial economy—especially young women. It provides training opportunities and access to skilled work to relatively poorly qualified school-leavers.

Hairdressing is very much part of the ‘everyday economy’ which Rachel Reeves and other leading Labour figures have at points emphasised, even if this usage is a bowdlerised version of the ‘foundational economy’.

But hairdressing is in crisis. The crisis is complex, but seems to be predominantly a problem of skilled labour supply. The population will continue to want regular haircuts. There are two routes: one primarily through further education colleges and one through salon-based apprenticeships. Many hairdressers regard the college route as substandard, delivering inadequately skilled workers to the salons where competence includes not only the functional aspect of cutting hair, but also people skills and self-confidence.

Some of the problems of hairdressing are parallelled by those of other ‘low tech’ industries. The problem has been worsened by the financial problems of the college sector. The cost pressures in the industry have reduced the willingness of salons to take on apprentices, at the same time as the proportion of self-employed workers has reduced the number of salons large enough to run apprenticeship schemes.

‘Industrial policy’ in the sector would have to be highly bespoke. For example, there are problems of thresholds for VAT registration inhibiting the provision of apprenticeships because salons with incomes below this threshold will find it hard to fund overheads like training.

The key aims of an industrial policy for hairdressing would be to improve the flow of skilled workers into the sector. It is not a sector that requires the injection of large sums of public money, though enhanced support of apprenticeship and further education provision, would greatly help—policies which are in line with the Labour government's existing aims.

The meaning of industrial policy

The key statement of the Starmer government on industrial policy makes clear that, as is now commonplace in discussion of the issue, ‘industrial policy’ has come to embrace almost any sector-focussed agenda, including parts of the service economy.

Industrial policy for growth-driving sectors aims to increase productivity and thus drive economic growth. It therefore has no direct interest in whether more good jobs will be created or how growth will be distributed. Industrial policy for the everyday economy has different objectives: it aims to increase the quality of services and jobs, while growth and productivity gains are secondary.

A wasteland of nail-bars?

In 2018, Neil Ascherson wrote a review of a pair of books on the British economy in the London Review of Books which referred to Britain as ‘a wasteland of nail-bars’. If we are interested in good jobs, small-scale, everyday service activities must be rescued from the condescension of progressive policy makers. Hairdressing would be a good place to start.