State of Working Britain

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2 State of Working Britain Aim is to Gives an up to date assessment of the performance of UK labour market, to highlight recent important developments seeks to describe and understand the major long-term trends Drawing on the experience of leading UK academics

3 State of Working Britain Split into Three main sections Employment and Unemployment - story of the recession - longer term stories - switch away from youth toward older worker employment, rise and fall of workless households, migration Job Quality - tenure, job quality, job satisfaction and family friendly employment) Inequality - earnings inequality, geography, gender and ethnicity, social mobility, unions e

4 Employment and the Recession GDP fall was the worst since WWII the employment fall was very modest compared with last two recessions Why? Not because of large falls in hours not jobs (as in Germany) or because of flexible labour markets (as US was the other way) Rather high profitability prior to recession, maintenance of consumption, flat real labour costs

5 Per cent change on year Employment and the Recession 8 GDP - Annual Change Employment - annual change

6 Employment index Employment and the Recession recession recession recession Number of quarters since start of the recession

7 Young and Old The last decade and the recession have seen profound differences in employment of the young and old Young Declining employment but rising educational participation makes historical trends not straightforward 1 in s are NEET but only 1 in 10 are unemployed but unemp rate is 20%

8 Young and Old

9 Educational outcomes by socio-economic position quintile, across surveys and ages Percentage 30 Young people not in full-time education or employment

10 Young and Old The last decade and the recession have seen profound differences in employment of the young and old Old Rapidly rising employment even post normal retirement age Rate of increase unaffected by the recession

11 Educational outcomes by socio-economic position quintile, across surveys and ages male female year full-time self-employed part-time Graphs by sex

12 Welfare The government has initiated a major overhaul of the welfare system, arguing spending is out of control. But the analysis behind the reforms is very reminiscent of that presented by previous government - Make Work Pay - Remove very high Marginal Tax Rates - Extension of Welfare Conditionality Not easy to separate welfare system from labour market and social changes

13 Caseload (thousands) Pre-recession saw the slowest rise in welfare spending since WWII ass falling roles funded increased generosity 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Year Sickness and disability benefits Lone parent benefits Unemployment benefits 13 13

14 UK has one of the lowest levels of welfare dependence in OECD it is only higher than US because of maternity benefits which US doesn t have

15 Polarisation of Work Excess of workless households % % % % % % %

16 Polarisation of Work Excess of workless households Share of LP Lone Parents families Couples with Kids % 25.8% 1.3% % 31.5% 2.8% % 21.4% 1.3% % 20.4% 1.7%

17 Job Quality Job tenure has been stable over the last 15 years But long-term (10+year) jobs are in decline mainly for men, but womens tenure rose substantially following greater use of improved maternity job protection Hours of work have fallen and paid holidays extended for many low skilled jobs through legislation Training and Skill levels are rising but Britain retains a poor record in this area on international comparisons. Job autonomy appears to have declined Work intensification and workplace stress have stooped rising but not reversed rises seen in early 1990s Mental health of workers is strongly cyclical,falling sharply in recessions, even for the employed (pay and security issues) and is much lower for the unemployed Marked improvements in the work-life balance of parents, with increases in maternity leave, free and subsidises childcare and right to request part-time working

18 Inequality in the Labour Market Wage inequality rose rapidly in the 1980s and at a slower rate in 1990s and 2000s, recently inequality has been rising in most OECD countries. Wage inequality is now rising almost entirely through the top 10% or so of the population pulling away and especially the top 1% or so. Since 2005 real earnings growth has been limited to the top percentiles. Gender wage and employment gaps have falling slowly but steadily over the last twenty years. Young women and men earn similar wages until their late twenties but gaps for those in their 50s are huge. This partly reflects cohort effects that are ageing out and partly that children and part-time working are associated with low wages.

19 Inequality in the Labour Market As with women, younger members of ethnic minorities are now better than their peers. But still have lower employment and wage rates, employment gaps have closed somewhat but not so wages. Employment gaps between Britains regions narrowed sharply from 1990 to 2006, almost disappearing between the midlands and London and the S. East. Cross-region migration has fallen as employment gaps have fallen. Britains assault on child poverty fell short of targets but was exceptional on international comparisons. Increases in lone parenthood, and lower educational levels of childrens parents hindered progress but work and wages helped modestly - shift toward working poverty was marked

20 Conclusions The book offers two major areas for conclusions which are important to looking forward the current performance of the labour market in the face of economic shocks and the longer term performance in tackling the major problems that had emerged over the previous 25 years. The 1980s and early 1990s saw the emergence of high wage inequality, and increased concentrations of worklessness on sections of society (households, less skilled, older workers, disabled, deprived areas etc) Our findings suggest that No progress: Wage inequality, low skilled employment, low quality of part-time work Modest progress: NEETs, workless households, Child poverty, disabled employment, regional employment gaps, skills and training Clear progress: Older workers, lone parents, gender and ethnicity employment gaps, work-life balance, exits from/longterm unemployment

21 Conclusions Britain held jobs well through the recession and has seen early job recovery (hit more on productivity). So Britain has no problem creating jobs when we have growth time LFS workforce

22 Conclusions Employment problem is the vast number of jobs required as well as well as 2.5 million unemployed there are - 200,000 working age population increase per year - 200,000 older workers staying in work per year - 800,000 disabled people who gmt is trying to bring into activity - plus likely continued increased participation of mothers Employment generation on this scale would dramatically ease the costs of ageing society Much of this increased labour supply will be for part-time working (hence need to mainstream part-time working) Prospects are for a long-period of low real wage growth