ANALYSIS: Hold the Christmas cheer – it’s a patchwork jobs recovery

The good news from today’s job figures is that unemployment continues to fall and more people are in work.
Wed, 17 Dec 2014 | By Chris WarhurstThe good news from today’s job figures is that unemployment continues to fall and more people are in work.

In fact, Christmas present looks good and it therefore seems like glad tidings for UK workers.

But dig underneath the Christmas cheer and another story emerges, one that reflects a patchwork recovery in jobs.

Regional divides continue: the employment rate is highest in the East and South-East of England, lowest in Wales; unemployment lowest in the South-East and highest in the North-East of England.

Moreover there are worrying developments within the labour market across the UK. True, employment is being created in the highest paying jobs. But at the same time more jobs are being created that pay the lowest wages.

The outcome is a polarising UK labour market. In fact, pay generally continues to be a problem. The government’s own figures show that average wages have dropped nearly 9% for men and nearly 6% for women since the financial crisis. Many are even working unpaid.

A key worry is that the incidence of low pay is rising, particularly for male workers. Helped by the National Minimum Wage, pay for workers at the bottom of the labour market rose before the financial crisis. That trend has now reversed. There are now more low-wage workers in the UK.
 
In addition, job insecurity remains a problem. In a YouGov poll, a third of workers worry that their job will get worse over the next 12 months. Despite the economic upturn in 2014, a quarter still worries that they will lose their job.

Again, there are regional variations: workers in the North of England are worried most about losing their job.

Over the past year the rise in employment has been driven by self-employment. But this self-employment is relatively low paying – today’s taxi drivers rather than tomorrow’s techie moguls. Most of the self-employed are in the skilled trades – carpenters and joiners, for example.  

With the economy not yet fully recovered, what is not clear is whether these new self-employed are the conscripts of the crisis – unable to find work other than by setting up their own businesses – or represent a new flush of entrepreneurial spirit in the UK.

Whichever is the case, average income for the self-employed is also falling – down almost a quarter since the financial crisis.

Indeed the ghost of Christmas present has a warning for the government: these changes in job quality might represent permanent structural change to the jobs market in the UK. The UK already has too many low-wage jobs.

Christmas future could be one of even more low-wage – and more insecure – jobs. If this is the UK’s future it would harm further economy recovery. With less pay and more insecurity, consumers will lack the power and the confidence to purchase the goods and services that will enable UK businesses to grow.

Christmas is a time for reflection. As with Ebenezer Scrooge, the ghosts are telling us that what we do now shapes our future. It’s perhaps time for us make sure that future is not a turkey.

Chris Warhurst is professor and director of the Institute for Employment Research at the University of Warwick.

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