Britain has experienced a decade of falling ‘employment inequality’

Published on Jobs, Skills and Pay

Britain’s post-crisis jobs boom has particularly benefited low-income households and disadvantaged groups – though rising employment has been accompanied by higher job insecurity for young people in particular – according to a new report published today (Monday) by the Resolution Foundation.

Setting the record straight explores how record employment levels have changed Britain since the financial crisis.

The Foundation says that ten years ago, no-one predicted the strength of Britain’s impressive jobs record. Unemployment stayed below the levels reached in 80s and 90s recessions, while employment has regularly hit new record highs since January 2015. The 2.7 million extra jobs created since 2008 have provided a welcome boost to living standards, particularly in the face of the UK’s severe pay squeeze.

Setting the record straight finds that lower-income and disadvantaged groups have been the main beneficiaries of Britain’s job boom. Almost two-thirds of the jobs growth since 2008 has gone to people in the bottom half of the income distribution, with employment growth even more progressive for those under the age of 50. People with low qualifications account for almost half of the jobs growth, while people with a disability account for a third of the rise.

As well as showing who has benefited from Britain’s jobs boom, Setting the record straight explores the big questions often asked about the wider effects of the employment surge, in order to identify what the priorities should be for policy makers in the years ahead. It finds:

The employment surge has not been as London-centric as some claim. Traditionally low employment urban areas across the UK are performing well, with the largest improvements since 2008 in South Yorkshire (+6.5 percentage points) and Merseyside (+6.4 percentage points). However, while overall geographic ‘employment inequality’ is falling, the Foundation warns that some areas outside of our big cities have seen less benefit from Britain’s jobs boom. Employment actually fell across the rest of Yorkshire and Humberside, and increased by just 2.2 percentage points across the rest of the North West.

Britain’s jobs boom has not been driven by low-wage jobs. Half of all jobs growth since 2008 has taken place 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. In contrast, the share of jobs in finance and retail has declined over the last decade. However, the report warns that young people haven’t fully benefitted from the growth of higher-paying occupations. The share of 18-29 year olds in lower-paying job roles has expanded over the last decade, while it has fallen for the rest of the workforce.

Rising employment over the last decade has been accompanied by higher job insecurity. Britain’s initial post-crisis jobs growth saw an increase in atypical – and sometimes insecure – roles such as self-employment, zero-hours contracts and agency work. This growth has been particularly acute for 18 to 29 year olds, where it has risen 50 per cent faster than for the rest of the population. Over the past year however, the entirety of jobs growth has been in full-time employee roles. Still, Britain has 780,000 people on zero-hour contracts, 950,000 agency workers and one in seven workers are now self-employed – all significantly above pre-crisis levels.

The Foundation concludes that employment growth over the last decade has been hugely impressive, particularly for lower-income households. Policy makers should focus on new challenges that have developed, particularly for the young and those in less secure work, and on the wider backdrop to this positive jobs boom – Britain’s ten year pay disaster that has left real average earnings still £470 lower than they were a decade ago.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“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.

“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 ten years ago.”