Alexandra Jones is the Chief Executive of Centre for Cities
By all accounts, the UK’s jobs market is picking up, with the latest figures appearing to show we have well and truly left the dark days of the recession behind. This is good news, no doubt, but the focus this and successive previous governments have afforded such numbers fails to recognise that more jobs alone will not drive our prosperity – nor, with the highest levels in in-work poverty Britain has seen in recent history – does it ensure that workers can provide for their families or contribute to their local and national economies.
ConservativeHome’s manifesto rightly identified the UK’s stagnating wages and a significant shift towards low-paid work as inconvenient truths that the next Government would ignore at its own peril. After all, politicians who continue to rely on job creation alone as a barometer of their government’s success will find themselves increasingly alienated from the concerns of ordinary people.
The latest Centre for Cities report, Unequal Opportunity: How Jobs are Changing in Cities, addresses this issue head-on. For the first time, we looked at the long-term structural shifts taking place in the UK’s city labour markets – and what we found is an increasing shift towards high-pay and low-pay employment, as the hollowing-out of the stable and secure ‘middle-range’ jobs of the past has begun to take effect.
Between 2001 and 2011, Britain saw one million new jobs created in high-paid, professional employment, 750,000 people shifting to low-paid, insecure jobs, and nearly 200,000 stable and secure middle-ranking jobs lost.
The decline in the middle has in large part been driven by the effects of globalisation, the integration of technology into businesses, and the rise of the manufacturing sector in developing nations – all of which have meant some British jobs are no longer in demand, or profitable in a global market. These have coincided with significant growth in professional, creative and IT-related employment at the top of the market, and a surge in care work, retail and customer services at the bottom.
As expected, the picture varies enormously between cities. Some, such as London, Cambridge and Brighton, have seen a huge surge in high-paid jobs, and it is predicted that by 2022, 60 per cent of all jobs in the capital will be in these professional occupations.
By contrast, cities such as Stoke, Luton, Coventry and Birmingham have seen enormously levels of polarisation of their jobs markets, as the number of residents employed in low-paid occupations has surged. Worryingly, these cities have also seen large falls in mid-pay occupations, meaning workers are at risk of becoming stuck in poverty cycles from which they and their communities cannot easily escape.
There is no doubt that low-paying jobs have always existed, and that it is still better for someone to be in work rather than out. Income, health and wellbeing are all boosted by employment. Yet the changes taking place in all our city labour markets are cause for genuine concern, and, if left untreated, have the potential to damage our future economic growth and erode our standards of living.
If the numbers of low-paid workers continue to grow, and the stable occupations of the past decline, ever more people in work will rely on government support to make ends meet. More wages will be subsidised through tax credits, and more people will need help through housing benefit. People working for low pay are also less able to contribute to the economy through consumption of goods and services – which is bad news for high streets across the nation.
Depending on your political persuasion, it is time to either ‘make work pay’, or tackle the ‘cost of living crisis’. There are three key ways in which the next Government could begin to stem the tides of low-paid work, and help secure a more prosperous future for the UK economy:
- Allow cities with high house prices to increase supply. This would not only support the aspirations of those who wish to own their own home, but also help to reduce the housing benefit bill by reducing rental prices. Relaxing planning restrictions and allowing citizens to enjoy the benefits of a wider tax base are key to supporting this.
- The Low Pay Commission should work with cities that have a strong case for introducing a city-region wide minimum wage to examine the potential impacts on employment and local businesses, increasing the wages of those in the most polarised and expensive cities, and reducing the need for government subsidy.
- National Government should give cities more flexibility over funding to help them improve business environments, so they can make investments to help support both new and existing businesses, including those operating in low-pay sectors, to thrive, create jobs and pay higher wages.
While reducing unemployment is vital, it is time for all parties to face up to the fact that employment levels alone can no longer be the yardstick of our economic health. Westminster must accept that the quality, not just the quantity, of jobs being created is vitally important – and give cities the tools they need to become better places to live, to work and invest.
Coming into the conference season, the pressure is on parties to set out their plans to tackle the polarisation in Britain’s workforce, and offer a compelling vision of how they will build a labour market that delivers for all citizens, and their cities, throughout the UK.