In this blog post, Institute for the Future of Work Director Anna Thomas discusses how the Chancellor could take further steps to align growth and social policy to create a ‘good jobs economy’ and deliver on the important promise to provide ‘good work, better skills and higher wages across the country'. This should be seen against a background of the longer-term structural changes to the economy driven by the reallocation of human and capital resources associated with what the Chancellor has described as the ‘new age technological progress.’
Supply shocks, energy prices, labour shortages and a peak of 1.1m job vacancies are on everyone’s mind. Public concerns are not amiss. UK job vacancies reaching a 20 year high this month illustrate a fundamental weakness in the job market that invites the Chancellor’s urgent attention: a tight labour market is obscuring a trend towards poorer quality, insecure jobs.
The allocation of resources towards the creation and protection of good jobs is the best way to meet current and the anticipated needs of our society, as we have previously argued. But a sustainable ‘good jobs economy, which demands policy orientation around the good work agenda across Government departments, cannot be built overnight.
The Governments furlough programme has been a relative success, and its end has passed seemingly without a spike in redundancies. However, beneath the headline figures, temporary jobs are increasing, and the job mix in vacancies is changing, with lower quality and poorly paid sectors, such as transport, storage, food services and hospitality, increasing at a faster rate. Policies aimed at creating new jobs are not yet bearing fruit, with no noticeable rise in vacancies for new jobs, and IFS data analysis suggests that opportunities for many workers have narrowed, rather than increased, through the pandemic.
The current skills mismatch in the UK labour market reflects both a skills shortage, suggested by stubborn labour shortages across the UK’s human service sectors, combined with a skills surplus, with people overqualified for job vacancies. This trend is exacerbated by falling overall levels of accessible, relevant vocational training. Historically, the UK has higher levels of skill-job mismatches than many OECD peers, and recent indicators suggest this trend may be becoming more pronounced, as predicted by the Industrial Strategy Council.
The Institute’s recently launched the Pissarides Review into the Future of Work and Wellbeing, supported by the Nuffield Foundation, will explore these early indicators further.
We know that technological innovation drives overall growth and most research to date suggests that the adoption of many automation technologies is accelerating. But the benefits and opportunities of technological innovation are not evenly spread and there appears to be even less‘ trickle down’ than past industrial revolutions. This is partly because capital-intensive technologies, many of which originate abroad, tend to be less integrated into the local economy. Institute for the Future of Work research in the Amazonian Era also points to technological innovation aimed at extracting value by the intensification of low-paid labour, rather than creating value by augmenting human skills or creating better jobs, as the Institute’s Abby Gilbert explores here.
More than this, many automated technologies are trained on data sets which reflect past patterns of resource so, without intervention, they may project inequalities into the future, as our Equality Task Force has explored.
On our current trajectories, this means that demographic and regional inequalities, overlaid by the further disruption of the pandemic, are set to become more pronounced. Women were more likely to have childcare responsibilities, no office space, reduced working hours, and be furloughed. The widening gender pay gap may, it seems, be the tip of the iceberg. Again, this points to the need to create and protect good jobs across our mixed economy, with as much focus on key workers, associated with less automatable, interpersonal skills.
We support higher levels of spending in people, infrastructure and institutions that support good work as the necessary longer, term investment required to build a ‘good jobs economy’. To make cuts in these areas would be a false economy, as Sir Christopher Pissarides, Institute Co-Chair, discusses here.
But, in addition to higher levels of investment, there are policy levers and alignments that could be deployed in the run up to initiating an overarching Work 5.0 Strategy aimed at building the conditions for future good work, as IFOW and the DWP Committee have argued:
1. Initiating a national strategic ‘Good Jobs Audit’
Our Good Work Monitor makes the case that Good Work should not only be our goal, but our guide for the allocation of funds and a measure of success for our recovery. Building on this work, a Strategic Good Work Audit would identify focus areas and action points at a national and local level. Good Work Partnerships, sought by the IES, would help coordinate action in response to the audit.
2. Introducing ‘Good Work First’ pledge for public procurement
A commitment to good work standards in procurement, in response to new challenges faced in the labour market is now appropriate. Scotland has just introduced a commitment to ‘Fair Work First’. The Treasury is well placed to expand this welcome initiative.
3. Aligning technology policy with labour market and industrial policy around the Good Work agenda
Both competition law and governance of AI are under currently review. Robust accountability, which includes the consideration of impacts on good, local jobs across the country, is appropriate and would help shape the best of British innovation - and a Good Jobs economy that spreads the benefits of technology through better work.
4. Incentivising Good Work
The March Budget introduced a tax ‘super deduction’ for investment in capital. Now, we need to extend the super deduction to human investment, to help fill significant gaps in the provision of relevant, accessible retraining across our mixed economy. Technology should be embraced but workers must supported through transition. Transition between sectors and occupations is not yet visible but will increase next year.
5. Expand the commitment to Good Green Jobs
Institute for the Future of Work research has exposed the reality that high-tech, high-skill Green Jobs are highly unlikely to meet the needs of the northern towns characterised by high levels of automatable jobs and poor provision of good ones.
We found green apprenticeships were hugely oversubscribed, and a historic lag of domestically trained engineers for this sector. This challenges the narrative that current readings of ‘green jobs’ can provide a solution to poor quality work of itself and invites a more expansive interpretation of Green Jobs which accommodates labour-intensive work supporting environmental transition. This should be integrated into implementation of the Net-Zero Strategy.
Embedding Good Work into funding allocation, procurement and the architecture of decision-making across Government, as well as economic strategy, will help the Chancellor direct resources towards the longer-term goal of building a future Good Jobs economy for the UK.