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March 13, 2023

Investing in the Future of Work - key asks for Jeremy Hunt's March Budget

Though the BBC’s Faisal Islam has written of how Jeremy Hunt will want his Budget on Wednesday to be ‘boring,’ with continued industrial disputes, the cost of living crisis and rescue of the UK arm of the Silicon Valley Bank, bolder interventions are needed to bridge immediate crises with strategic planning. We believe that there are two key dimensions needed to pilot the UK forward: sustained investment in the future of work, and policy action to tackle growing inequalities. These are the preconditions for good work to drive prosperity and wellbeing across the country. Our key asks for this Budget are:

Foster local Future of Work strategies and compacts

The government has been right in its aim to tackle regional inequalities through the Levelling Up agenda. However, the Levelling Up Fund is neither large nor targeted enough and the current centralised approach to funding mechanism is detrimental to the purpose of the fund. This should be abandoned by Hunt as it encourages unhelpful competition between local areas facing different challenges. 

It is now a year since the Levelling Up White Paper and the trailblazer devolution deals that it announced. These should be both scaled and broadened so that ‘compacts’ between local authorities, mayors and other tiers of government can seek additional funding and powers to develop local Future of Work strategies, as proposed in IFOW’s Good Work Monitor. This will enable local authorities to identify and build the conditions needed for good, local jobs across the job life cycle, with decisions being made as close as possible to the people affected by them.

Public Sector Pay

It is vital that public sector workers feel valued and appropriately remunerated and it is now clear there are sound economic, as well as social and ethical bases to act. As argued in my (Chris’) paper in the journal of the British Academy, keeping increases in public sector pay in line with that in the private sector will not have an inflationary effect, as the government has represented, but will instead lay the foundations for the creation of good work across the economy. Wage adjustments cannot compensate for all of the rise in the cost of living but public sector workers should not be made to pay a greater share than the private sector. On the basis of these ONS figures, a 7% pay rise would would steer this course, providing fairer pay without risking an increase to inflation

At the same time, the government should also expand the remit of the Low Pay Commission to be a UK ‘Fair Pay Commission,’ and consult on going even further to create a Good Work and Fair Pay Commission. This would act to develop policies on improving the dimensions of good work beyond pay, including terms and conditions, Good Work audits, partnerships and a ‘Good Work First’ pledge for public procurement that we have called for in the past. The Government has encouraged public sectors to focus on things other than pay. This is an easy way to start.

Investment in technology, skills / human capital and green jobs

We welcome the message from last Tuesday’s launch of the UK Science and Innovation Framework that research, development and technology are crucial to drive future prosperity and wellbeing. But, as revealed by forthcoming research from the Pissarides Review, we are seeing very uneven technology-related investments across sectors and regions.

Hunt should announce that investment in designing, developing and deploying technology should be offset so long as firms undertake Good Work impact assessments, which should also include a dedicated equality element. Incentives to adopt technology should also be supported by investment skills and human capital to maximise opportunities, unlock human as well as technological capabilities and reduce risks of exacerbating workplace inequalities. Both are falling when they are needed more than ever.

We also propose restoring relief for research spending, together with a commitment to a major, new innovation challenge on promoting ‘good’ automation that spreads the benefits of the technological transition as widely as possible.

Last week’s rollout of the UK Local Skills Dashboard is welcome and goes some way to fulfilling our ask in response to the October 2021 Budget for more detailed labour statistics.  However, more detailed statistics on technology adoption and job quality are needed to help trace the impacts of technological disruption on people and communities across the country and inform the development of Future of Work compacts. The Pissarides Review into the Future of Work and Wellbeing, supported by the Nuffield Foundation, is incorporating new statistics as part of our exploration into the implications of automation technologies and how they are transforming work, society and the economy in the UK.

Skills and training

Central to the UK Science and Technology Framework are commitments on skills and training. There is a promise to ‘create an agile and responsive skills system,’ as well as, ‘giving people the opportunity to train, retrain and upskill throughout their lives.’ We believe that Hunt should scale and broaden the apprenticeship levy and pilot a ‘skills and better work’ levy to widen the scope of development activities and goals supported by the levy to the dimensions of IFOW’s Good Work framework. Our Future of Work Commission has also recommended piloting of a new ‘mini furlough’ scheme to mainstream and increase access to training.

Childcare

For many parents of young children, especially in low income families, childcare costs have escalated to the point that it precludes return to work. In addition, labour market shortages are pronounced in the so-called family-friendly sectors of health, social care and hospitality. This has to change, and Hunt has trailed that he plans to act.

We support significant investment in formal childcare infrastructure with childcare provision properly linked to labour market policy, and a Denmark-style childcare guarantee at an affordable cost (around £450 a month in Copenhagen for a child under 3) which could be covered by increases in tax and national insurance. This ‘universal childcare guarantee’ would mirror and complement the ‘lifelong learning guarantee’, and be underpinned by commitments to freeing parents from an excessive burden of childcare costs, getting people back to work and investing in the development of people's capabilities.

Conclusion

In this time of poly-crises, a Future of Work Strategy is the best way to bind all of these elements - from research investment to childcare - into an interconnected suite of policies that forefront good jobs and build resilience to future social, economic and health shocks.

Author

Anna Thomas and Chris Pissarides

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