A Polarising Crisis? The changing shape of the UK and US labour markets from 2008 to 2012

Published on Jobs, Skills and Pay

The polarisation of the UK labour market intensified during the great recession and its aftermath as low- and high-skilled jobs expanded while middle-skilled jobs fell as a share of employment. This report, produced in collaboration with the London School of Economics, lends credence to concerns that the long downturn may have pushed the UK towards a two-tier labour market.

A Polarising Crisis? examines in detail for the first time how the UK and US job markets have been changed by the 2008 financial crisis. It reveals that both countries have seen middle-skilled occupations decline while those at the top and bottom have grown since 2008. The findings also highlight how different industries have fared in the UK since the crisis struck.

  • From 2008 to 2012, employment in the lowest-paid third of sectors in the UK economy grew by 190,000 while the highest-paid third of sectors saw employment grow by 140,000. In the same period, employment in the middle-skilled third of sectors fell by almost 170,000.
  • The UK has had strong employment growth at the top and bottom of the labour market. At the top, the high-paying Business Activities sector (including consultancy work) expanded rapidly, growing by 16 per cent and adding 461,000 jobs between 2008 and 2012. At the bottom, the UK’s lowest paying sector, Hotels and Restaurants, grew faster than any other sector, with employment growing by 17 per cent or 218,000 from 2008 to 2012. But not all low paying sectors expanded: retail saw a decline in employment of 185,000 from 2008 to 2012, shrinking from 14.8 per cent to 14.1 per cent of total employment.
  • Employment in the UK Manufacturing sector continued a long-term decline, falling by 262,000 from 2008 to 2012 while Construction saw an even bigger decline, the sharpest of any sector, with employment falling by 339,000 from 2008 to 2012.
  • Public sector work saw sharply differing outcomes: while Public Administration and Defence saw employment fall by 271,000, there were gains elsewhere in areas such as Health and Social Work where employment rose by 314,000 from 2008 to 2012.
  • In addition to its results for the UK, the report also contains new findings for the American labour market.