Winners in the globalisation race, including virtually the entire business community, must spread their gains, and retrain those being left behind, writes IoD director general Simon Walker
Trust matters. Before I joined the IoD I ran the private equity industry’s trade association. No serious private equity partnership ever broke the law.
But because the industry lacked transparency, and few businesses saw themselves as accountable to the public, the whole sector was shrouded in mystery.
As the then City minister, Paul Myners, told us, it is just much easier to run a business if you’re not regarded with suspicion by customers, suppliers, unions, legislators and current and prospective employees.
That’s why it’s good that the 2016 Edelman Trust Barometer shows trust in business is at a post-financial crisis high – at 52 per cent. But let’s not get carried away. The “informed public” – graduates who follow the media with top-quartile earnings – report trust levels of two-thirds in UK companies. Little more than one-third of low-income households trust business to “do the right thing”.
There is a problem here, and it ties in with concerns about the huge disparities of wealth and income in our society.
Over the past 30 years, globalisation has brought fabulous gains to those who are fast, flexible and digitally literate. As Bill Gates says, the price – or wage – of a skilled lathe operator is several times the price of an average lathe operator. The value a skilled software engineer brings to a business is 10,000 times the value of an average software engineer.
But globalisation losers have votes too. There is a massive and growing gap between those whose skills and education mean they benefit from technology and open borders, and those whose jobs disappear.
Britain lost 20 million ‘old jobs’ between 1980 and 2000. Now the Bank of England thinks another 15 million are at risk to automation over the next 20 years.
Globalisation’s winners, who include virtually the entire business community, need to spread their gains, and, with governments, retrain and upskill those being left behind.
Otherwise the temptation to kick the global elite in elections – and the EU referendum – will be irresistible. Unless the world is to be run by Presidents Trump and Le Pen – both seeking to block imports from abroad – its beneficiaries need to find ways of bringing the victims into this shared new era.
Competition in retail banking is to be applauded. The arrival of challenger banks such as Metro Bank and Virgin Money should benefit customers and provide a more positive view of an unloved sector.
That’s why it’s a disappointment to see Metro, where I have an account, going in for the sort of sharp practice that heaped opprobrium on the traditional high street banks. “0% commission travel money” reads the electronic billboard with “Free card transactions in Europe” thrown in.
But with a buy rate of $1.59 and a sell rate of $1.36, Metro is giving itself a spread of almost 25 per cent on a day on which the exchange rate was actually $1.45 to the pound. Exchanging euros gave the bank an equally generous margin – €1.4564 to €1.25. Unfortunate Poles wishing to send zlotys home faced a spread of 17 per cent.
Shame on Metro. This is not “0% commission” – it’s a disguised and substantial fee. As mobile-phone providers found, businesses can get away with sharp practice for a period. But they win few friends and invite heavy-handed regulation.
Modernise or die
Off I went to drinks at the Reform Club, to celebrate the CBE awarded to a friend. As he came down the steps looking disconsolate, I asked an eminent peer, once a household name, why he was leaving before the party started. He had been thrown out for failing to wear a tie.
There are many sins against the dress codes of Pall Mall clubs. Maintaining the aristocratic theme, a baroness faced rejection for wearing leather trousers. Papers and briefcases are snatched off visitors as they enter the hallowed portals in case they carry out business. And woe betide anyone whose phone rings inside these grand premises.
But I have no sympathy with our Pall Mall neighbours. If they do not modernise and reform, they will die. The IoD has a dress code: clothes are required.