Child poverty in Scotland is not as bad as statistics make it out to be

The best example is the state of the labour market, quite benign at the moment despite the continuing painful slowness of general economic recovery from the great crash of 2007-8. The size of the Scottish workforce is at its highest ever, nearly 2.7 million, and this includes the 200,000 immigrants (net figure) who have come to join us since 2000. They make a valuable contribution, and they do not take our jobs. Otherwise we would not find unemployment at its lowest level in half-a-century, less than 4%, which by the traditional measures adds up to full employment.

The shadow on this sunny landscape is that we are not as productive as we could be. It takes one Scot five days to make what one German, Frenchman or American makes in four days. For this failing the Scottish Government is more to blame. In its various unco-ordinated efforts to “save jobs” it seems blissfully unaware that the right thing for the workers, and for the nation, is that they should move on as swiftly as possible from companies which are failing to those which are set fair to flourish. With full employment this should not be hard. The money thrown away on rescue operations would be far better spent for retraining the labour force than for subsidising incompetent capitalists.

READ MORE: It's time for radical action to end child hunger

There is, of course, a counter-argument that Scottish jobs available today are less skilled and more casual than Scottish jobs of the past. The gig economy has, in that sense, degraded working life for those who need to move on in the way just described. Still, I’m not sure theirs is a permanent condition, because the industrial revolutions in every century from the 18th to the 20th led, via some inevitable disruptions, to expanding employment with more skilled specialisation, steadily rising pay and improved working conditions.

We have a labour force well-educated and qualified by any standards, and we must aim at job creation to match. This will depend on investment, which in turn will depend, once again, on productivity. Without the higher profits which proceed from improved productivity, there will be no money for desirable investment. Profits is the word in this explanation that meets with the most indifference or hostility from the Scottish Government, in its inner desire for a static economy controlled from the top down. That says all we need to know about how our politics is at the moment screwing up our economics. And I have not even started to talk about the bigger bungles of UK policy in Scotland.

Yet, as I say, the labour market is, for the time being, fine, and the workers are happy. Strikes have not been so rare since Victorian times. This is the 18th-richest country in the world, with a standard of living equivalent to that of France. Within the UK, because we lack the class of super-rich who push out the social extremes in the south-east of England, Scotland is relatively also a more equal society. Contrary to what some of my columnist colleagues might hope, with their tales of such grinding hardship among Scots as to make Somalis look affluent, this douce little country is about as far from revolution as it is possible to get.

All the same, there is one feature of the economic scene I find hard to fit into my harmonious picture. In general, data about any given society are consistent with one another. If there is some glaring contradiction, it is a hint to humble seekers after truth to keep searching till it can be resolved. In my case, the snag is child poverty. The concept is regularly brought home to us by the Joseph Rowntree Foundation. If it was run by Communists I could cope with it, but it is run by Quakers.

And it tells us that one in four Scottish children, 230,000 of them, lives in poverty. The analysis is so influential as to have prompted the Scottish Parliament to pass a Child Poverty Act, aiming, among other things, to cleanse this stain on our society by 2030. If that analysis is right and mine is wrong, then indeed Scotland is no normal modern nation of north-western Europe similar to those in Scandinavia that we like to compare ourselves with. It is closer to a developing country in its yawning social extremes.

READ MORE: Scottish inequality gap increases as poverty deepens

The idea is nonsense, of course, but we need to understand why. First, some technical stuff. The point of reference by which we are defined as so poor is the UK median income (it means 50% of households earn more, and 50% less). The figure is dragged upwards because most of the fattest cats live in the south-east of England. This means more Scots will appear to be poorer simply because the people of another country are richer: not a good reason for gloom.

On the Rowntree definition, child poverty appears when household income falls below 60% of the median. But this again is a purely statistical apparition. When our Victorian forefathers wanted to find child poverty they went out to see barefoot waifs with sooty brooms in hand on their way to sweep chimneys. Somehow, I don’t think we witness that anywhere in Scotland today. These particular figures for child poverty do not come from empirical observation but are derived from more general economic statistics.

For instance, a recession such as we have been living through cuts inequality and therefore cuts poverty too. When an economy goes downhill, profits and capital incomes fall fastest and furthest, so that the rich lose most. This means inequality narrows. Then, as the recession lifts, it is capital incomes that grow again and increase inequality. The Rowntree definition of poverty turns out to be a peculiar one. Poverty shrinks as we all get poorer, which is what happens in a recession. Poverty grows when we all get richer, which is what happens in a boom.

As a matter of fact, we are talking not about poverty but about inequality, and we should be more careful in drawing the distinction. In the 18th-richest country in the world, it is easy for us to be against poverty. Inequality is not so simple because a lot of our inequality exists by the will of the people. For example, we accept that the highly qualified should earn more than the unqualified and would find bizarre any suggestion that, for example, a brain surgeon must be paid the same as a hospital porter. And in general, we accept older people should earn more than younger people, because older people have accumulated experience of their job that makes them better at it.

An economic structure like this is the product of 10 working generations or so since the industrial revolution got under way. Often it was built not just on the orders of the bosses but also through the struggles of the trade unions. On the whole it has worked well, and peacefully. If, by a statistical quirk, it produces something that can tendentiously be called child poverty, I don’t think we should worry too much.