Cordant Focus

Category: Employment Landscape


The changing labour market

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The UK is moving from a manufacturing to service-based economy which has brought change to the labour market.

Sector, occupational and geographical elements that make up the labour market have changed, as has the nature of work with increases in part-time work and a rise in females in the job market.

Working Wages

A study by the ‘National Union of Students’ highlighted that the UK labour market is increasingly characterised by higher wage work, requiring advanced qualifications at the top and low wage service sector jobs at the bottom of the earnings distribution, while jobs in the middle have been declining.

Between 2001 and 2012 the only job types which increased were those at the extreme ends of earnings distribution. Those in caring, leisure and service occupations and those in sales and customer service occupations have median earnings around 35 per cent below median earnings for the economy as a whole,  which have grown by 13 and 30 per cent respectively.  

Professional occupations and technical roles which have the top end of earnings, between 14 and 37 per cent above the economy’s median, have grown by 10 to 74 per cent respectively.

The retail and wholesale sector, where managerial jobs increased between 2000 and 2008, the proportion of these jobs earning below £400 per week, adjusting for inflation, increased from 37 per cent to 58 per cent in this time period. Even the financial sector experienced growth in the proportion of managers earning less than £400 per week from 24 per cent to 30 per cent.

At the bottom end of the labour market there has been a consistent rise of low paid employment, 21 per cent of all employees in the UK, or just over five million individuals are currently working in low pay.

The average FTSE 100 CEO salary on the other hand, was £4.8 million, 185 times the salary of the average UK employee.

Flexible Labour Market

A report  from ‘The National Union of Students’ studied the changing labour market in the UK and in particular the rise since the late 1970s in creating a flexible workforce.

The rise in flexible working is essential for higher employment economic success. There have though, been demands to make further regulation  to avoid the ease of companies to hire and fire workers,  short term contracts, low unemployment benefits and weak trade unions.  

UK firms are paying one of the lowest non-wage costs per employee than any other EU country. One outcome of this approach is the stagnation of median wages and increasing incidence of low pay.

One other contention of the increase in flexibility in the UK labour market is the use of zero hour contracts. These contracts mean that employees are asked to be available for work with no commitment on behalf of the employer. This puts employees in an insecure position. According to the Labour Force Survey (LFS) those on zero house contracts are more likely to be women, and are more common in the arts and recreation services, accommodation and food as well as the caring and leisure sectors.  Often those on zero hour contracts are in the sectors of low levels of pay and high percentage of those workers have low or no qualifications.

Flexibility though is still cited as one of the attractive features of the UK economy but there is still growing pressure to create equality and therefore social justice in the market place.

A recent shift from public to private sector job creation

A study from ‘The National Union of Students’ noted that since 2009 the share of total employment provided by the public sector has fallen from 22.0 per cent to 19.2 per cent. This has been the lowest the public sector has fallen since records began in 1999. The share of the private sector has risen meanwhile from 78.0 per cent in September 2009 to 80.8 per cent in December 2012.

More than four-fifths of those on lower pay work in the private sector and there is a higher prevalence of zero hour contracts than in the public sector.

Graduates rate the public sector as a good employer, even since government spending cuts in the sector began. They are thought to be attracted to the relative security in the public sector and opportunities for further training and development.

The study found that the public sector is recruiting a higher proportion of graduates than the private sector.

Increases in the proportion of jobs created by small firms

A study from ‘The National Union of Students’ found that between 1998 and 2010 total employment in the UK expanded by 8 per cent over the 13 years. The majority of those roles were created by small firms.  

Of the total 2.61 million jobs created on average each year during this period, 34 per cent were contributed by existing small firms (less than 50 employees), with a further 33 per cent contributed by small new start ups. Since the recession began in 2009 the importance of small businesses in generating employment has steadily increased.

The study found that 71 per cent of jobs created in 2009/10 were by small firms and new start ups- the majority of which are small in size (60 per cent of start-ups are accounted for by one employee firms). They also found that 28 per cent of all jobs in the private sector were either created or destroyed every year.

Churn in these micro-enterprises (less than 10 workers) was found to be around twice that for larger firms of 250+ workers.

Costs of recruitment are relatively high for micro and small businesses, especially with the creation of apprenticeship positions. This continues to squeeze the number of opportunities for study leavers entering the labour market.

Many students’ unions, especially in universities, have already undertaken excellent work in this area through enterprise initiatives to support students to set up their own businesses. This is a key area of opportunity for students’ unions to engage in.