The UK Labour Market in 2018: New Challenges with Labour Pool Size, Regional Differences and Staff Training
We would like to thank Joe Fyans and the non-partisan think-tank Localis for their time in explaining to us their views on local labour market practices. Make sure to head over to the Localis website and download their report "In Place of Work: Influencing Local Labour Markets".
On the surface, despite the uncertainty of Brexit, everything seems to be fine with the UK labour market:
Labour market participation rates are high (1)
Unemployment is low and is expected to hold steady around 4.3 to 4.7 percent until 2020 (2)
What could possibly go wrong? Well, actually, it turns out quite a lot, because of the following structural challenges:
Wages and productivity have stagnated for the past decade (3) Britain has one of the least trained workforces in the OECD (4) and this limits the ability to meet the opportunities and challenges of new technological and economic solutions as they as they occur. Unlike Germany, there is no cooperation between small businesses and local authorities to tackle issues of (or relating to) staff development
New Challenges in the UK Labour Market
While Brexit may have started to fade from the headlines, its effect on the amount of migrant labour available for temporary staffing, staffing in nursing and care service and in other sectors of the service economy, such as hospitality, will be felt for at least the next decade.
Importantly, Brexit decreases not only the number of migrants entering the UK labour market from inside the EU but also the number from outside of it (5). This will undoubtedly lead to the wider social question of whether low skilled jobs will become a more acceptable, mainstream career option again.
The situation is further complicated because an ageing society (6) will demand more care and service workers from a decreasing labour pool. It is also reasonable to assume that, not all of these new jobs can be replaced using automation and AI, at least during the next decade (7).
Hence the question: where will the workers come from?
Trend Nr 1: Atypical Work Arrangements Are Becoming More Popular
Fortuitously, technology is popularising atypical work arrangements and is making them easier to create, fill and apply for and a more pleasant experience for everyone involved.
At PARiM, we focus on the last bit but more well-known companies like Uber, Deliveroo and thousands of others are doing their own part in mainstreaming what is called the "gig economy" but is actually just the temporary staffing part of the service sector. This makes it more socially acceptable for a wider range of society to work in jobs that were previously considered less prestigious.
That may sound like good news if you manage temporary workers and are always looking for new team members. However, less migration and the increasing use of atypical labour across sectors may mean more competition for people who perform better in atypical jobs.
Trend Nr 2: Full-Time Jobs Are Becoming More Similar to Atypical Ones
Increasing use of Rota Software and new scheduling strategies, often in a questionably forceful (what does this mean – more forceful) manner to save costs quickly, in large organisations like the police force, the fire brigade, the NHS and service-oriented corporations will lead to full-time jobs resembling part-time ones in the way the working hours and pay are calculated and how management communicates with the staff.
Mind you, this process usually happens with grievances from staff and administrative departments that adopting a more flexible workforce scheduling software like PARiM would prevent. Historically, the introduction of such working practices or technology would traditionally result in grievances form both staff and administrative but PARiM prevents these by.making workforce management simple and easy to understand, get going and by engaging workers and giving them more transparency and visibility.
Regional Variance in the Impact of Automation
Even though the effects of automation, increasing use of artificial intelligence and virtual reality are often heralded in the media as a universal revolution - the real effects of these trends will vary from sector to sector and region to region.
Most at risk are jobs in the Logistics and Warehousing sectors and regions like the East Midlands where a larger percentage of workers are involved in work in these and related sectors (5). While regions with increasingly affluent but ageing populations like Gloucestershire face the opposite problem: the revolution of automation cannot reach the people there quickly enough to fill the coming void in jobs in nursing and care. (6)
For companies in the 'Golden Triangle' of Oxford, Cambridge and London these technologies will be just another set of tools in a high-tech tool belt. Companies there are able to adapt to change, if not to lead it globally, and to retrain their staff accordingly, without any support from regional authorities.
However, as the Localis report outlines, in other areas of the country, and not just the North-East of England but also many areas in the South and elsewhere, that is a bit too much to ask. And companies, people and entire regions are falling behind
While some of them may enter the temporary work sector seamlessly, most workers from regions like the East Midlands will need retraining and redirection towards new sectors and the new
One Possible Solution
Analysing this situation has lead Localis to suggest that staff training and wider local labour strategies have to be supported by what they call Strategic Authorities. In the case of England, they propose a tentative list of 50 or so authorities - some along historical county borders but others based on new economic realities.
The crux of the proposition is that privatising employee training does not work for most of the nation. It´s not realistic to expect SME´s or even larger local companies to conduct effective and let´s face it, interesting training sessions and create a curriculum that engages a low-skilled workforce and that actually works, in terms of preparing people across all ages for the increasingly dominant economic trends like life in the temporal workforce, working beside robots and with artificial intelligence and so forth. Not to mention more structural work to tackle the problems of productivity and wage growth.
Sources:
(1) https://data.oecd.org/emp/labour-force-participat...
(2) https://tradingeconomics.com/united-kingdom/unemp..
(3) https://www.consultancy.uk/news/15235/uk-wage-sta...
(4) https://www.oecd.org/unitedkingdom/43947857.pdf
(5) http://www.localis.org.uk/research/in-place-of-wo...