Tobacco and jobs: the impact of reducing consumption on employment in the UK

Abstract

This report assesses the economic significance, in terms of employment, of the tobacco industry to the UK economy. Government figures show that from 1970 to 1991 the number of people employed in tobacco manufacturing has fallen from about 40,000 to 12,000 (about 0.5% of total jobs). Industry sponsored studies suggest that far greater numbers are involved in supplying goods and services to the tobacco industry and distributing and selling tobacco products. However if tobacco consumption continues to fall these jobs will not all be lost. The reason is that when consumers spend less on tobacco they tend to spend the money on other products instead. The money is not lost to the economy. Given that the industries that make these other products also will have to be distributed and sold, jobs in alternative industries will be created. Since tobacco manufacturing is now so capital intensive, a higher total number of jobs may result. This is what we have investigated in this study. This study takes data from 1990, the base year for the government’s Health of the Nation target for a 40% reduction in smoking, and looks at what would happen to employment if consumption was reduced by 40%. The study uses data on spending patterns to look at different ways in which smokers who stop might re-allocate their released tobacco expenditure. It also simulates two possible government reactions to reduced tobacco tax revenue. Most of these simulations show that a reduction in spending on tobacco would result in a net overall increase in jobs in the UK. Under the assumption we believe are most reasonable there would be an overall increase of about 150,000 jobs. These results suggest that current policies aimed at reducing smoking related disease and deaths may also benefit the economy by creating more jobs. Whilst employment is naturally not a primary focus of The Health of the Nation, it is fortunate and reassuring to discover that government health policies are also good for employment.tobacco, revenue