Work in 2030: Even more precarious than it is now

I’m slightly surprised by the lack of discussion, in the media or online, about the Future of Work report from the UK Commission for Employment and Skills. There was a flurry of interest in the idea of the 4 Generation workforce (see Tuesday’s post) but not much about any of the report’s other findings.

Anyone interested in the labour market and the future of work ought to read this report. It is well researched and thought-provoking. Of course, its projections are educated guesses designed to get people thinking but you could say that about any government or think-tank report.

The disturbing thing about all the scenarios described by UKCES is that they are pretty grim for most employees. Apart from the highly skilled and the already rich, the outlook for everyone else is an increase in precariousness, uncertainty and low pay.

Here is a summary of the four scenarios for Jobs and Skills in 2030:

Screen Shot 2014-03-05 at 14.55.54

The report expands on what each of these means for employees:

1 Forced Flexibility

Employees find themselves in an hourglass-shaped labour market. For highly skilled individuals, a progressive work environment allows for greater autonomy and a better balancing of work and family life. While the “squeezed middle” of the workforce sees jobs disappearing, low-skilled workers compete ferociously for positions (across all sectors). Security of employment is highly important for individuals – especially the low-skilled. Intergenerational differences need careful management in the work place, since many young people are trapped in low-level entry positions, as older people stay in employment longer.

2 The Great Divide

Employees experience new job opportunities due to the growth of companies providing high-tech goods. New jobs are also created in the higher value business and professional service industries that are linked to these new technologies. Positions for highly skilled workers come with a high degree of autonomy. Among the medium and low-skilled there is intense competition for poorly paid temporary positions, with limited career prospects, and a continued drop in demand for medium and low-skilled workers in manufacturing. Generation Y shapes organisational values and practices. Flexibility, transparency and employee engagement are widely adopted by business, but their application is effectively limited to the highly-skilled.

3 Skills Activism

Employees face long periods of unemployment, in particular those professionals made redundant by IT automation. Work is mainly project-based, with a high turnover of jobs, which can make the development of new skills more challenging. 

4 Innovation Adaptation

Employees face relative insecurity of employment, many being forced to develop ongoing portfolios of project-based assignments with a variety of employers. Company-specific qualifications are often demanded as an entry ticket to jobs.

So if any of these scenarios comes to pass, or even a mixture of them, life for the medium to low skilled is likely to get worse. Job security, personal development, autonomy, engagement and all those other good things become limited to the highly skilled elite at the core of the organisation.

The report goes on to suggest that the use of zero-hours contracts could extend to half the workforce by 2030. The scenario described:

With individuals facing such high competition in the job market, employers are able to structure employment conditions to meet their specific needs. It is evident in a rise in the practice of zero-hour contracts, and similar flexible arrangements, coupled with the decline of investment (by employers) in up-skilling individuals.

A possible outcome is a highly polarised labour market, with low- to medium-skilled workers in constant competition for more hours – either in zero-hour contracts (low and unskilled) or as freelancers – offering employers low wage bills and utmost flexibility. Full-hour contracts would be limited to a small minority of core staff in executive positions, similar to, e.g., Sport Direct today (only 10 per cent of all staff were on regular contracts as of 2013; Neville, 2013).

Companies’ investment in skills might be tightly concentrated on job-specific requirements. In addition, uncertainty about one’s personal income situation reduces the incentive to pay for one’s own training, hurting overall skill levels.

Far fetched? Maybe so but last week, the CIPD warned that the UK is becoming a low wage, low skill, low cost economy.

The low cost, low road economy means Britain has the highest proportion of low skilled jobs in the OECD after Spain. 22% of UK jobs require no more than primary education, compared with less than 5% in countries like Germany and Sweden. Low skilled jobs obviously mean low pay and carry wider social implications. In-work poverty has increased by 20% in the last decade, creating a huge benefits bill.

The OECD figures quoted come from its report on skills from last year:

Screen Shot 2014-02-27 at 11.22.48

Last month’s Resolution Foundation report on living standards spotted a shift in the labour market during the recession. There was an increase in the number of high and low skill jobs but a decrease in those at the middle level.

Screen Shot 2014-02-27 at 12.41.58
And some of this shift might be long-term:

To better understand whether recent shifts in the UK labour market are here to stay, we can look at changes in the types of jobs the UK economy is creating. Resolution Foundation research had already shown that the UK labour market was polarising before the crisis struck. In common with other mature economies, middle-skilled occupations have been falling as a share of employment while low and high-skilled jobs were expanding. We now know the crisis accelerated these trends. From 2008 to 2012 Britain’s low- and high-skilled jobs expanded their share of employment while middle-skilled jobs declined faster than they had previously.

Despite economic growth over the next few years, the Resolution Foundation reckons that, five years from now, the real-terms median working-age income will still be below what it was at the start of the recession.

Screen Shot 2014-03-05 at 15.41.18

Projections from the OBR tell a similar story.

OBR Wage ForecastNone of this looks good for those on low to average incomes. They may spend much of this decade simply struggling to recover what they lost during the recession. The number of mid-level jobs, which might have been a route for some to improve their financial circumstances, has shrunk. Relative to other advanced economies, Britain has a high number of low skill jobs.

Against this background, then, the grim forecasts outlined in the UKCES report don’t look quite so unlikely. Low pay and low skill can become self-perpetuating. If pay is low, employers don’t need to invest as much. It costs less to throw cheap workers at a problem than it does to invest in new technology or processes. If the workers are on temporary and zero hours contracts anyway, why bother to invest in their development? Low investment means that skills stay low and pay stays low.

We see this reflected in the UK’s productivity figures. Part of the reason behind Britain’s fall in productivity is simple maths. If employment increases but the economy doesn’t grow, then productivity must fall. Self-employment, which accounts for three quarters of the growth in employment since the recession, has increased in Britain at a much faster rate than anywhere else in the G7. Incomes, especially those from self-employment, have crashed. While pay rates have recovered in most countries, here, they are still well below their pre-recession level.

Screen Shot 2014-02-27 at 10.26.27

Source: CIPD Megatrends

It should therefore come as no surprise that, according to the ONS, the UK’s productivity is lagging behind that of most of the major advanced economies.

Screen Shot 2014-02-26 at 17.55.46

We are not doing well when compared to some of the smaller ones either.

Screen Shot 2014-02-26 at 18.00.58

With the exception of the US, productivity took a hit in all the major economies after the financial crash. Most, however, have recovered more quickly than the UK.

Screen Shot 2014-02-26 at 18.17.07

Source: Centre for Policy Studies

Again, we can’t just blame the recession for this. Poor productivity has been a feature of Britain’s economy for some time.

Screen Shot 2014-03-04 at 09.59.28

Source: LSE Politcs Blog

The recession has made an existing situation worse. The UK was closing the gap in the decade before the recession only to see it open up again with the financial crisis. The relative gains we made over the past couple of decades have been completely wiped out.

As the LSE’s Bob Hancké notes, the UK is now among the hard-working low productivity countries, not the smart-working high-productivity ones.

Screen Shot 2014-02-27 at 09.34.42Last month, CIPD CEO Peter Cheese warned against taking the low road of low productivity, low skill and low pay:

Skills supply and demand lie at the heart of the problems facing the UK. We have a higher proportion of very low-skilled jobs than many other developed economies. This has to change.  

The issue is not simply about increasing the supply of skills – a preoccupation of current and past governments. The solution to the challenges we face lies just as much with improving skills utilisation and demand for higher-level skills through increasing the number of higher skilled roles available. To do this, we need to encourage more employer investment in innovation and growth and the capabilities and skills needed to deliver high- performance workplaces which can better utilise the skills available and to generate opportunities, raise productivity and add value, which are vital to our long-term international competitiveness.

So investment, innovation, more highly skilled people and, crucially, more higher-skill jobs. He continues:

Unless we address the demand side of the skills equation, we will fail to improve our poor productivity or to achieve the sustainable increases in real wages that have become such a dominant feature of the current media and political narrative.

 The UK is at a crossroads – one which requires us to think about the fundamental nature and direction of our economy. Are we taking the high road – of higher skills and value-added employment – or the low road – trying to compete primarily on low cost?

At the moment, we seem to be stumbling with a post-recession hangover towards the low road.

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16 Responses to Work in 2030: Even more precarious than it is now

  1. Great post. Might I chip in the following contribution to the debate:
    http://www.theworkfoundation.com/Reports/350/Constrained-Work-Job-enrichment-employee-engagement-in-low-wage-low-skill-jobs
    …asking whether some jobs are just too boring to be enriched.

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  3. Needs2Cash says:

    PEOPLE NEED TO KNOW THEIR STRENGTHS

    Do we work to benefit others or ourselves? Ideally we work to benefit ourselves beyond receiving a paycheck.

    This means we need to know our strengths, gifts or natural attributes to enjoy what we can do well. And we need to be able to match those strengths to careers or jobs.

    But what proportion of people know this about themselves and about the jobs needing our strengths. And what are other skills and knowledge we need to become competent? If the parents, schools and employers are not enabling this understanding who is?

    The stats make this look as if we are mere victims of change. I will admit that some of us are 40 years old or older before we discover our strengths and the work we enjoy doing. Imagine the lives of those never discovering what they can do well.

    Thankfully, work that cannot be enjoyed and done well by sufficient workers will eventually be be eliminated or automated.

    But what is being done to enable people to understand their strengths so they do not become victims of employment changes that are wrought by customer needs?

  4. GrumpyLecturer says:

    If the ‘UK’s productivity is lagging behind that of most of the major advanced economies’ this raises questions as to how effective and efficient have been government strategies of Privatization and Human Resource Management strategies based on an individualistic approach to the Employment Relationship.

    It is now apparent that the UK’s obsession with ‘efficiency savings’ have had at best no affect on productivity levels or at worst have been responsible for its decline.

    How the employment relationship is handled nationally does have a bearing on worker productivity.

    Have the last thirty years been no more than a failed ‘ideological experiment’ in laissez-fair Capitalism?

  5. Pingback: Is precarious work necessarily a bad thing? | http://error451.me

  6. Mark Beatson says:

    A blog that pulls together a lot of recent material and which we’ve read with interest at CIPD Towers.
    The UKCES is a thorough piece of work and a useful contribution to the debate (for once, that phrase is not intended as a put-down!). The lack of coverage may be bad luck but it may also be because this type of material – especially scenarios – are quite difficult to communicate succinctly to people not already exposed to the debate. Hence the focus on something that is easy to imagine, such as the 4G workplace (which also has the advantage of being a racing certainty almost regardless of scenario).
    It seems there is a lot of interest almost everywhere I go in the future impact of technology on jobs. I talked about this yesterday to a group of Civil Servants at the DWP and one put his hand up and said “have you got anything encouraging to say?” That’s a good question. We tend to focus on the challenges and threats but technology has over the last couple of centuries made out lives immeasurably better (and means we live much longer to enjoy it). We often forget that. It has also helped eliminate many of the most dangerous and boring jobs and components of jobs. Past experience, of course, provides no guide to the future and the transition phase may be extrelemely disruptive.

  7. Pingback: UK: Work in 2030 will be more precarious than it is now | Peak Jobs

  8. tom schuller says:

    A really useful post – thanks. The debate around the projected shrinking of full-time permanent jobs raises for me two questions:
    1. do we look to preserve as many as possible of these jobs, and urn things around so that more of them (re)appear? or do we turn the thing on its head, embrace differentiated hours working, and concentrate on improving conditions for that kind of flexible employment?
    2. I’m wondering how many of the good, but now hollowed-out, middle jobs have been ones that women were moving into, with their improved qualifications. In other words, as these jobs/sectors became feminised they also become vulnerable – independently of technological forces.

  9. oldcobbler says:

    “22% of UK jobs require no more than primary education, compared with less than 5% in countries like Germany and Sweden.”

    What are these jobs which 17% of the UK workforce are doing, which don’t exist in Germany ? Or do the same jobs exist in both countries , but require formal qualifications in Germany and not in the UK ?

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  11. Nigel Paine says:

    I wonder whether any intervention strategy ends up chasing after the fact. As soon as you devise a policy the market moves on. These changes are phenomenal and are happening faster than it is possible to keep track of. Great and useful post.

  12. Pingback: Where have all the flowers gone? | Work Musing

  13. perrytimms says:

    Reblogged this on adjusteddevelopment and commented:
    From the most immense blogger I know, the most immense and thought provoking research/thought piece that we ALL need to understand more. I’m off to read this in more detail but what a great job here by @FlipchartRick. Thank you.

  14. Pingback: Owning the barriers and building the levers: upskilling the UK : RSA blogs

  15. Pingback: Owning the barriers and building the levers: upskilling the UK | City Growth Commission

  16. Pingback: The gig economy is here, and it’s not a pretty picture — Gigaom Research

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