Patrick Spencer is the Head of Work and Welfare at the Centre for Social Justice. Gerard Lyons is chair of the CSJ Future of Work project.
By anyone’s measure, the British jobs market is thriving. More people are in work today than at any point on record, there are fewer people stuck in low paid jobs and the average household is finally seeing some decent wage growth.
The foundations of this success are numerous – a flexible labour market, balanced regulation, a reformed welfare system, and a strong private sector. The importance of work should not be lost on us either. Time and again, evidence shows that a job offers someone a stable source of income, a sense of purpose and dignity, and is linked to better mental and physical health outcomes. Work is the best means of lifting someone out of poverty.
However, while trend lines point in the right direction, the future of work is peppered with potential pitfalls. A report to be published by the Centre for Social Justice tomorrow outlines four of these major traps, that could jeopardise Britain’s ‘jobs miracle’, particularly for those on the margins of work.
First, the country’s industrial landscape remains hugely imbalanced. Economic growth, jobs and prosperity are predominantly generated in our cities. This is case across most developed Western economies but, unlike other countries, a single city, London, remains the major engine in our economy. It contributes approximately a quarter of UK economic output. The next most significant city is Manchester, which contributes around five per cent. London’s productivity is twice that of the UK average, and its economy grew twice as fast as the national rate in 2016. What is most concerning is that job forecasts show that most high value service sector jobs (in the tech sector, professional services or finance) are going to be located in and around London. The UK economy will be hampered if it remains so dependent on a single major commercial hub.
Second, technology is cause for concern. This is, of course, not new. Fatalism regarding automation has existed since the Luddites rebelled against the introduction of the spinning jenny. So far, fears of mass unemployment have been misplaced, but the likely reality is that, as technology displaces old jobs, the new jobs it creates may not be available for those who need them. It’s hard to expect someone working for a good wage as a machine operator in a factory willingly take up a job on minimum wage in a call centre. The biggest error in Britain’s post-industrial era was not making sufficient plans to help people who lost their jobs in the coal and steel industries to find new opportunities. Obviously, this will require a national effort to develop a mid-career retraining plan. But how will that work in reality? Should it be managed at a local level, or through employers, and how will it be paid for?
Third, this means that the skills agenda will be a major component in any planning for the future of work. The jobs of the future are likely to demand new and different skills. Research conducted by the World Economic Forum, the EU Commission and others suggests that employers will increasingly demand intangible competencies such as communication, management, critical thinking and leadership skills. Where, in the past, jobs were functional, and one was often siloed within an organisation, we will be expected in the future to work on projects as part of wider, diverse teamd that cross geographical and technical boundaries. People will undoubtedly be expected to have more advanced technical and digital skills, working with data and software to a much higher standard. The UK education system must reflect these changing needs, otherwise young people will find themselves increasingly uncompetitive in a globalised economy.
Finally, we need to prepare for changes in our society that will have a large impact in the jobs market. We are living longer, meaning th`t many of us are likely to work into our late 60s or even 70s. The millennial generation might be the first to have a working life that lasts half a century. Combine an ageing workforce with population growth which predicts that Britain will surpass Germany as the most populous country in the present EU by 2030, and policy makers will need to prepare for a future where much more will be expected of public services.
But we should be optimistic. The British economy’s successes have been due to a natural work ethic, innovation and a thriving business sector. All of these things will continue, mitigating the future risks we outlined above, but only if we get the policies right today.