An Overview of the UK Labour Market (2017)

Adapted from Taylor’s ‘Good Work’ Report (2017). This report reviews the current state of work and makes (some fairly limited and piecemeal) policy recommendations about how to make work fairer for more people.

Characteristics of the UK labour market

The Review coins the term ‘the British way’ to describe the current working landscape in Britain – Full-time, permanent work remains the norm, but other ‘atypical’ arrangements are usually chosen and valued by the individuals concerned. The authors argue that this system works effectively for most people, and hence their recommendation that we should aim to improve the quality of work within this existing framework.

To back up this view (that work ‘works’ for most people, numerous evidence is given including the following:

  • In recent years the UK labour market has been characterised by strong performance, with record high levels of employment and the lowest unemployment rates since 1975. The current employment rate of 74.8%8 is the highest since records began. The unemployment rate, at 4.7%, is the lowest since 1975. The inactivity rate9, at 21.5% is the joint lowest since records began.
  • The UK is widely recognised as having one of the most flexible labour markets in the world. The UK is rated as having the 5th most efficient labour market in the World, which is seen as vital for economic productivity.
  • Full-time, permanent work as an employee continues to make up the majority of employment in the UK (63.0%). However, there has been a notable shift towards more flexible forms of working overtime, with changes in levels of self-employment and part-time working in particular.
  • Currently, almost 26.2% of employment is in part-time work, compared to 25% in 1997 and self-employment now accounts for around 15.1% of total employment.

Key trends in the way we work

‘Traditional’ full-time employment continues to dominate the UK labour market and has only declined 1.6 percentage points from 64.6% to 63.0% over the last twenty years; with the most noticeable fall occurring during the most recent recession.

This section outlines some of the trends in ‘atypical work’ of which part-time and self-employed working are the main sub-types.

Employment by type UK

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Part time work

  • Part time work makes up 26.2% of total employment, and has generally been on the rise for the past 20 years.
  • The majority of part-time workers (70.7%) say that they do not want a full-time job.
  • 4% of part-time workers say that they are working part-time because they could not find a full-time job.

Self-employment

  • Self-employment reached a high of 15% of total employment during 2016.
  • Self-employed people are slightly more likely work part-time than those in regular employment.
  • Joinery, plumbing and construction are the largest sectors for self-employment.

Agency work

  • There is a lack of robust data on the number of agency workers in the UK.
  • Estimates range from 800,00 to around 1.2 million.
  • The Recruitment and Employment Confederation (REC) estimate of 1.2 million is generally considered to be more reliable,

Temporary workers

  • Temporary workers, who include temporary agency workers, account for around 1.6 million of the total number of UK employees.
  • Around a quarter of temporary workers (25.5%) state that they do not want a permanent job, while 27.4% say that they are a temporary worker because they could not find a permanent job.

Zero Hours Contract

  • 905,000 people (2.8% of those in employment) are reported to be on a zero hours contract.
  • 65% of people on zero hour contract work part-time (65%).
  • Younger people, those aged 16-24, are also more likely to work on a zero hours contracts and account for one third of total zero hours contracts.
  • 18% of those on a zero hours contract are in full-time education
  • Whilst data suggests that there have been large increases in the number of people on zero hours contracts since 2012, this increase is, at least in part, due to an improved recognition of this type of contract. This means that we cannot know with certainty that zero hour contracts are on the rise and in fact reported numbers have stabilised in recent periods.

Multi-jobs

  • Approximately 1.1 million people, or 3.5% of the total number in employment, have a second job.
  • This proportion has been fairly stable at between 3.5% and 4.0% for the last ten years.
  • This official data probably doesn’t include people earning additional money in a more casual way, through the use of online platforms for example. McKinsey Global estimates that 20-30% of the working age population are engaged in independent work. This includes self-employed people but also accounts for people using sharing or gig economy platforms e.g. individuals renting out rooms on Airbnb, driving for Uber, or selling goods on eBay or Etsy.

Gig economy work

The gig economy tends to refer to people using apps to sell their labour. The most commonly used examples are Uber and Deliveroo but there are many and a growing number of platforms facilitating working in this way.

  • The Chartered Institute of Personnel and Development (CIPD) estimate that there are approximately 1.3 million people working in the gig economy in the UK, equivalent to 4% of the UK workforce.
  • 58% of gig economy workers are permanent employees, which suggests that most gig economy workers use gig work to supplement income from more ‘traditional’ employment,
  • Research suggests that the gig economy will continue to grow.

The report also notes that limitations with current survey data means that we do not know for certain how many people are undertaking gig economy work and whether they are doing so to supplement other work, or substituting employment totally with this type of work.

Why the Labour Market Doesn’t work for everyone

The key factor is an imbalance of power between individuals and employers. Where employers hold more power than employees, this can lead to poorer working conditions and lower wage levels. The relative amounts of power are linked to geographical mobility.

There are also problems pertaining to self-employment….where companies might redefine a worker as self-employed, thus denying them holiday pay and other benefits and there are many examples of increasing media and public concern in relation to worker exploitation.

Two previous recent government reviews looking at this issue are:

  • The Business, Energy and Industrial Strategy Committee’s ‘future world of work and rights of workers inquiry’, prompted by the Sports Direct scandal; and
  • The Work and Pensions Committee’s ‘self-employment and the gig economy inquiry’, focusing on bogus self-employment.

Challenges to future work:

The report lists a number of challenges to future work – including:

  • Poor real wage growth
  • Poor productivity
  • Getting the skills to match the jobs (the proportion of graduates working in low-skilled jobs increased from 5.3% in 2008 to 8.1% in 2016.)
  • New business models and platforms for working
  • Automation

At the end of this chapter the report restates its belief that the UK labour market needs to maintain its flexibility and dynamism in the light of Brexit, it also recommends that we don’t need to do anything about automation yet, and that all we need to do is to maintain a ‘value commitment’ to ‘good work’.

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