Good news Edinburghers! Amazon is locating a contact centre in the heart of the city centre in the under-used old GPO building on Waverley Place. So now when your books or CDs go missing or your Kindle breaks down you’ll be able to doorstep them instead of hang about for hours trying to get someone on the phone.
The announcement of 900 new jobs – 500 permanent, 400 temporary over 5 years – is a welcome investment, and of course our First Minister was on hand to issue the glad tidings. But the burd would have been much more impressed if the jobs had gone to one of Scotland’s unemployment black spots, for Edinburgh has very little need of such artificially engineered inward investment.
It may even struggle to fill the jobs, as anyone running a BPO (business processing operation) or service sector business could testify. Yes, Edinburgh has a “high quality workforce” but it is actually, largely, gainfully employed elsewhere and it’s unclear if unemployed graduates will be keen to sign up as customer contact operators, instead of as teachers, lawyers and journalists.
Last October, the unemployment claimant count for Edinburgh local authority area was 4.2%, well below the national average of 5.1%. Yet in West Dunbartonshire, recently claiming the ignominy of worst unemployment black spot in the UK, the rate is double that, at 8.4%. Apparently, one of the reasons for the location in Edinburgh is because of the proximity to the new warehouse facilities in Fife. Fair enough. But couldn’t these contact centre jobs have gone to somewhere like Clackmannanshire which has an unemployment claimant count of 7.5% and is just as close to the Fife warehouse? Here’s a thought: the jobs could even have been located in Fife itself where unemployment is 5.7%.
Amazon also cited the financial support being given by Scottish Enterprise as a reason for locating the project in Edinburgh. A grant of £1.8 million has been awarded to help train new staff, among other things: that’s a nifty £2k per employee. Nice. But it is unclear how or why the company qualified for Regional Selective Assistance (RSA), the most likely type of grant to be awarded.*
Rules on awards of RSA are supposedly made according to a set of criteria and ALL these criteria must be met to qualify. Moreover, companies must be able to demonstrate that “your project needs RSA to proceed as planned. RSA will not be offered… if we (Scottish Enterprise) believe the project will proceed anyway”. Given the reasons for choosing Edinburgh, surely the project might have gone ahead without RSA?
No matter, it would seem that the first essential criterion for investment, that it take place in Scotland within an assisted area, is not being met. The rules are quite labyrinthine so bear with me. For the purposes of RSA, Scotland is split into three tiers: Edinburgh is located within a Tier 3 area and according to Scottish Enterprise, only small and medium-sized enterprises (SMEs) can qualify for RSA in a tier 3 area.
Now I’m not the brightest burd in the eyrie and appreciate that sometimes what constitutes a small, medium and large business will be subject to varying degrees of definition and shades of grey. But in no way could Amazon, with an estimated net global worth of $78.09 billion, be considered anything other than large.
So, on the first essential criterion, Amazon fails and should not have been entertained for Regional Selective Assistance, which incidentally is funded by taxpayers.
Does it matter that rules appear to have been broken by the payment of this investment grant? According to Scottish Enterprise, no: not when “it sends a message to the rest of the world that Scotland is a world-class business destination”. I’m sure the goodly, unemployed folk of West Dunbartonshire and Clackmannanshire and hard-pressed taxpayers all over the country would agree.
*Other types of grant awarded by Scottish Enterprise are Innovation and R&D grants; loans and innovative co-investment activity by the Scottish Investment Bank; sector funding (for a specific range of sectors of which BPO is not one); and other funding which is business gateway, business transformation etc. RSA comes under the heading “grants for investment projects” which this seems most likely to be.