Jon Moynihan, Executive Chairman, PA Consulting Group, has been interviewed about the economic decline of the West, on BBC Radio Five Live. The programme examines the state of the United Kingdom’s economy in light of ongoing recession and decreased GDP but improved employment figures.
The interviewer summarises Jon’s opinion piece in The Times (15 August 2012) about economic decline, which suggests that, due to the marked disparity in wages between China and the UK, the UK cannot compete. As a result, the UK will continue to get poorer over the next ten years, which is just the start of the decline in its standard of living.
After referring to the positive response that his article has generated online, Jon says: “There are approximately 500 million workers in the West and they earn $135 a day; [there are] 2.5 billion in the East and South. Half of them earn $12 a day in an urban environment and the other half earn $1 a day. There has been a steady drain of jobs ever since countries like India and China decided to go capitalist. In 20 years they have taken over many industries such as steel and slowly they are climbing up the ladder.”
Jon questions how the UK can compete if China can pay $12 a day for a better educated and harder working employee than what is available in the West. Commenting on what the UK can do to survive in this environment, Jon says: “The first thing to do is recognise the facts.”
Referring to the online comments responding to his article in The Times, Jon suggests that ordinary people understand the current situation and can see that we have been living above our means: “The UK now has a bigger debt as a percentage GDP than any country except Ireland and Japan. We have a bigger debt than Spain, Greece and Italy. That is because we are trying to prop up our standard of living while people start to lose jobs and earn less. In the end we are spending more money, although households are paying down their debt, and the government is increasing its debt substantially every year, although it has a plan to say that we won’t be expanding it in a few more years.”
“We have to understand we are living above our means and can no longer afford to spend the kind of money required to answer every pressure group and give away money to people who say we must give because it’s ‘the right thing to do’, as opposed to first asking whether we can afford it. The first thing is creating a change in attitude.”
Jon goes on to give his view on inflation in the UK: “When you count in inflation of 5 per cent a year, that means that people are earning less and less year by year. It’s happening but people just aren’t talking about it.”
Commenting on the potential for ongoing recession, Jon says: “I think we have been fooled by the fact that, for 50 years after World War Two, jobs were going up by 2 per cent a year, wages for the same job were going up by 3 per cent a year and it happened year after year for 55 years. Suddenly in year 2000 it all came to an end. And the jobs data today may say this or that, but what we have to do is look at the long-term trend and we will see that we do really have to start accepting a new reality.”
To hear the interview in full, please click here and listen from 2 hrs 42 minutes in.
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The interview is based on an opinion piece written by Jon Moynihan in The Times. Click here to read the article in full.