UK faces continued employment inequality

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High levels of employment have benefited low-income households and disadvantaged groups but led to higher job insecurity among young people, according to the Resolution Foundation

The Resolution Foundation's report, Setting the record straight, explores how record employment levels have changed Britain since the financial crisis.

Unemployment has remained below levels seen in the '80s and during recessions, while employment has regularly hit new record highs since January 2015, researchers explained. The 2.7 million extra jobs created since 2008 have provided a welcome boost to living standards, particularly in the face of severe pay squeezes.

The think tank’s research found that low-income and disadvantaged groups have been the main beneficiaries of this jobs boom. Almost two-thirds (65%) of the jobs growth since 2008 has gone to people in the bottom half of the UK’s income distribution. People with low qualifications account for almost half (49%) of the growth, while people with a disability account for a third (33%) of the rise.

The report also found that the employment surge has not been as London-centric as some claim. Urban areas that have traditionally suffered from low employment are currently performing well, with the largest improvements since 2008 in south Yorkshire (+6.5%) and Merseyside (+6.4%).

However, while overall geographic ‘employment inequality’ is falling, some areas based outside of the UK’s major cities have benefited less, the think tank warned. Employment fell across the rest of Yorkshire and Humberside and increased by just 2.2% across the rest of the North-West.

The foundation emphasised that Britain’s jobs boom has not been driven by low-wage jobs. Half (50%) of all jobs growth since 2008 has been in professional occupations, business services and real estate jobs, all of which are relatively high-paid. An ageing society has also led to strong growth in the health and (low-paid) social care sectors, it said. In contrast the share of jobs in finance and retail has been in decline over the past decade.

But the report found that young people haven’t fully benefited from the rise of higher-paying occupations. The share of 18- to 29-year-olds in lower-paying roles has increased over the past decade while it has fallen for the rest of the workforce. This age group has also been most affected by insecure employment types.

The initial post-crisis jobs growth saw an increase in atypical – and sometimes insecure – roles such as self-employment, zero-hours contracts and agency work, the report found. Growth in these roles rose 50% faster for 18- to 29-year-olds than for the rest of the population. However, over the past year the entirety of jobs growth has been in full-time roles, the report added.

Stephen Clarke, senior economic analyst at the Resolution Foundation, said that policymakers should focus on new challenges that have emerged in the employment market. “Ten years ago, when the UK was in the depths of recession, few would have predicted that Britain would break new employment records again so quickly. But that is exactly what has happened," he said. “Record employment levels have changed Britain and seen falling ‘employment inequality’, as the 2.7 million jobs boom has particularly benefited lower-income families and disadvantaged groups.

“While the jobs surge has not been as dominated by London or low-paid work as some claim, new challenges have developed – particularly for younger workers and with a big rise in insecure work. And while more people are working, as a country we are still earning less each week for doing so than we were 10 years ago.”

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