Do Election Results Matter That Much?
Business Voice, June 2005
Last month’s election result reflected the mood of the British people. They wanted to teach Tony Blair a lesson but they were fairly happy with a Labour government. But will it make any difference to Business? In my view, there are a number of structural trends in society that will have a far greater impact. These will be the drivers of both government policy and business activity. Many of these I outline in my book Britain in 2010: the Changing Business Landscape.
For a start, the election result will have no impact on the ageing population. No only will there be a big increase in the over 70 year olds, but of those of us who are middle aged. The over 45’s will become a growing market over the next decade forcing businesses to re-focus their marketing and selling strategies. The present obsession of media, marketing and advertising agencies with the under 35’s will have to end. There are not going to be many of them around! Already the impact of this trend is reflected in the fact that Classic FM is the most listened to radio station and of course BBC Radio 2 eclipsed its sister station Radio 1 years ago. Its Terry Wogan and not Chris Moyles who pulls the punters.
Where government policy will have to intervene is in the provision of pensions. People are not saving enough and unlikely to do so in view of their daily financial demands. This means that legislation will probably have to be passed bringing in some form of enforced savings. This could either be through an increase in taxation or via employee contributions. Government hopes that people will work longer, possibly into their 70’s are unrealistic.
There is a culture of early retirement that no fear of old age poverty is likely to change. Less than 50% per cent of all men are in full time jobs. There are more than 5 million men and women above this age who are economically inactive. They regard themselves or are deemed by their doctors to be unavailable for work. David Blunkett, the new Minister for Work and Pensions, is going to have his work cut out to sort out some of the abuses.
By the time most people reach their mid to late fifties, they have had enough. The emphasis on performance targets in both the public and the private sectors leaves employees exhausted. Whether they are doctors, social workers, front-line managers or whatever, they feel worn out by having to meet daily, weekly, monthly, quarterly or yearly figures. They want to do something different with their lives. Not only to play golf or to retire to France or the South of Spain. They want to develop their creative skills away from the scrutiny of the Audit Commission or their line managers.
The only way that people will be encouraged to work longer will be if work-life balance issues are taken more seriously. If the government does take a lead on this by passing imaginative legislation that does not put up employer wage costs, so much the better. But it is difficult to see how this can be done, particularly in the hard pressed small business sector. The challenges created by the rise of the Indian and Chinese economies are enough for British business without the government adding to the pressures.
Perhaps the only government measures we are likely to see are in relation to the abolishen of the retirement age. As in the States, why shouldn’t employees work into their seventies if they want to? The problem is that there are too few of them for the reasons I have suggested.
Another major demographic trend that is unlikely to be affected by government policies is the growth of single person households. As I suggest in my book, these are on track to account for 40% of all households by 2010. This increase is mainly among the over 35 year olds and is primarily the result of the gender revolution. More women, as they become upwardly mobile in career jobs, are choosing to live alone. Others are splitting up from their partners with greater frequency. This means that last year no fewer than 28% of first time mortgages were given to live alone women.
This demographic upheaval will greatly impact upon corporate marketing and sales strategies. Advertising appeals have to focus on the aspirations of women who, in the absence of male partners, make decisions about household and life style purchasing patterns. No more will this be evident as in the leisure and hospitality sectors where the customer experience is still directed to the values and life styles of young couples rather than to the preferences of older, single men and women.
It is the gender revolution that accounts for the shortage of young people and the ageing of the population. Women are having fewer children and at a later age. This drop in the national fertility rate is leading to skill shortages that can only be met by an increase in international inward migration. Already toady, 27% of London’s residents were born outside the UK. How would our health services, agricultural and hospitality industries cope without this inward movement of young, motivated men and women? The majority regard their stay in Britain as temporary while they earn enough money to build a house back home. Of course, there is an alternative. The government could offer tax incentives to encourage women to have more children. Somehow I doubt that this would be a popular policy but that is exactly what is done in France.
Taking these demographic trends together and bearing in mind the challenges created by an increasing competitive global economy, it is not surprising that national election results are but one of many factors that shape corporate strategic decision-making.
© Professor Richard Scase