The UK is on the cusp of a major reshaping of its economy as the effects of Covid-19, Brexit and the transition towards a net zero economy are felt – marking the end of a long period of stability.
This finding from the Changing Jobs report, by the Resolution Foundation and the Centre for Economic Performance at the London School of Economics, contradicts the popular impression that we have gone through an era of rapid change. The report states that the popular conception that the UK labour market has been in rapid and accelerating flux in recent decades – with robots replacing jobs, and factory work replaced by gig economy jobs – is completely inaccurate.
This report is about the nature and speed of change in the UK’s labour market, about how past periods of rapid change have happened, and about workers’ experiences as they have lived through these changes. It is written with an eye to the upheaval we expect to see in the coming decade as the effects of Brexit, Covid-19, and the net zero transition work their way through the economy. It forms part of the Economy 2030 Inquiry, a joint research project between the Resolution Foundation and the Centre for Economic Performance at the London School of Economics.
We need a rich understanding of how economic change happens
Policy debates are dominated by strongly held misconceptions about economic change such as: it’s speeding up; it takes place mainly by workers in shrinking sectors losing their jobs; and that it undermines job quality for some via a ‘polarisation’ of the labour market into bad and good jobs. There certainly are bad outcomes for those workers who do face involuntary job loss, and periods of faster economic change have been associated with higher rates of such job losses. But we need a richer understanding of how economic change happens, especially if we are to make a success of navigating the faster change we expect to see in the 2020s. In particular, we highlight three key facts about the UK’s recent experience of economic change:
Structural change (the reallocation of labour across different sectors) has been slowing down in recent years, not speeding up.1 Alongside this, the rate at which workers move between jobs and sectors has also slowed down.
Sectors can decline through older workers leaving and fewer younger workers joining, as well as through workers in the middle of their careers being forced out. To a significant extent, and as far as it is possible to tell with the available data, this was the case for the fall in manufacturing employment since the 1980s. Involuntary job losses do happen, however, particularly in declining sectors, and these can have serious negative repercussions for the workers involved.
In recent years, and in contrast to some other countries, occupational change has tended to involve ‘upgrading’ (the growth of higher paid occupations) more than it has ‘polarisation’ (the growth of high and low paid jobs), especially for women.