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What is the economic contribution of the alcohol industry?

IAS has estimated that the alcohol industry is responsible for 770,000 UK jobs, around 2.5% of all employment in the country.[1] This is lower than Oxford Economics’s estimate of 898,000 jobs in the beer and pub sector,[2] and the Wine & Spirit Trade Association’s estimate of 588,000 jobs attributable to the wine and spirits industry.[3]

Figure 5 attempts to show how these jobs are distributed. It shows that relatively few people are involved in the direct production of alcohol – fewer than 30,000 in total, mostly in brewers and distilleries. By contrast, the vast majority of alcohol industry jobs (80%) are in retail, and more specifically the on-trade.

 

However, jobs in pubs, clubs and bars are often part time – only 35% of pub jobs are full time.[4] These jobs are also among the lowest paid in the British economy, with a median hourly wage in 2015 of £6.82. By contrast, alcohol production is relatively well remunerated. Median pay in breweries is £18.02 an hour, well above the national average, and even the average for manufacturing – £12.88.[5] Distilleries pay only slightly less on average, £16.31.

It is important to note, however, that any reduction in spending on alcohol would at least partly be offset by increased spending on other products. Consequently, lower alcohol consumption would not necessarily be bad for the economy. Indeed, an analysis of the economic performance of US states between 1971 and 2007 found that a 10% increase in per capita beer consumption is associated with a statistically significant 0.41 percentage point drop in annual income growth.[6] This is most likely because lower levels of drinking lead to lower unemployment, sickness and premature death. Similarly, researchers at the University of Illinois and Johns Hopkins University have modelled the economic effect of taxing alcohol and reinvesting the revenue in higher public spending, finding that a 25¢ per drink tax would generate 95,000 jobs in California, 35,000 in Texas and 29,000 in New York.[7] See the Institute of Alcohol Studies report Splitting the bill for further discussion of this issue.

 

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[1] Bhattacharya (2017), op. cit., p. 14

[2] Oxford Economics (2016), Local Impact of the UK Beer and Pub Sector: A Report for the British Beer and Pub Association. Lisburn: Oxford Economics <http://bit.ly/2DgQGV4>

[3] WSTA (2016), WSTA Market Overview 2016. London: WSTA

[4] Bhattacharya (2017), op. cit., p. 15

[5] Ibid

[6] Cesur, R. & Kelly, I. R. (2014), Who pays the bar tab? Beer consumption and economic growth in the United States, Economic Inquiry 52:1, pp. 477–94

[7] Johns Hopkins Bloomberg School of Public Health Center on Alcohol Marketing and Youth, Consumer Costs and Job Impacts from State Alcohol Tax Increases. Available from: <http://www.camy.org/research-to-practice/price/alcohol-tax-tool/index.html> [Accessed 13 October 2016]