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’s authors state 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.
Instead, the pace of structural change in the labour market – the rate at which different job sectors grow and shrink – has been falling consistently since the 1980s and fell to its lowest level in a century in the 2010s. Even at the height of the pandemic in 2021, changes in the structure of the labour market represented just 7% of total employment – two-thirds below the level of change in the late 1980s.
The labour market is often characterised as being in rapid flux, as robots replace workers and with the rise of gig economy jobs. But these claims are very wide of the mark” – Nye Cominetti, Resolution Foundation
The relative stability of the UK jobs market has for decades limited opportunities for pay-enhancing job moves.
Manufacturing saw the biggest structural changes in the 2010s, found the analysis, with employment falling by 9%, with the loss of 280,000 jobs. Professional services jobs saw the largest growth in the 2010s, increasing by 40%, and 912,000 jobs.
Compared with the 1980s, say the authors, this represented stability. During that decade, manufacturing shrank by 27% (and 1.8 million jobs), while professional services grew by 58%, (and 566,000 jobs).
But the relative stability of recent times and its corresponding declining job churn has been a mixed blessing for workers, say the authors, with falling job mobility – the proportion of workers moving jobs per quarter fell by 25% between 2000 and 2019 (from 3.2% in 2000 to 2.4% in 2019), while the proportion of workers moving sectors has fallen by 35%.
During periods of major labour market change, of workers who have experienced involuntary job losses only half were able to return to work within six months. They received lower hourly pay (down 1.1% on their previous job) when they did return. But since the 1990s with less change in the labour market the number of involuntary job losses halved – from 0.8% of workers per quarter in 1991 to 0.4% in 2019.
Those who switched jobs voluntarily during periods of labour market upheaval typically benefitted from a “mover’s pay bonus” of 4 percentage points over the levels of pay growth experienced by workers staying in the same job.
Rui Costa, research economist at the LSE’s Centre for Economic Performance, said that decades of declining job churn, which had meant fewer risks and opportunities for workers, was likely to be upended in the decade ahead.
“Covid, Brexit and the net zero transition are set to considerably reshape our labour market over the coming decade – leading to more job churn as some sectors and occupations expand, while others decline,” he said.
“Many workers will make the most of this change through pay-enhancing job moves, while others will face considerable challenges in adapting to the changing economic landscape. Workers who are likely to lose out during this shift will need to be better supported, prepared and protected than they have been during previous periods of big economic change.”
Nye Cominetti, senior economist at the Resolution Foundation, said: “The labour market is often characterised as being in rapid flux, as robots replace workers, and well-paid factory work is replaced by low-paid, low-security gig economy jobs. But these claims are very wide of the mark.
“The reality is that the pace of change has been slowing down, not speeding up. This has reduced the risk of people losing their jobs, but also limited opportunities for workers to move onwards and upwards.”
Alex Beer, welfare programme head at the Nuffield Foundation, which funded the report, said: “Low productivity over the past couple of decades has been accompanied by lower levels of change across different sectors of the economy, and fewer people moving jobs. To protect and promote people’s wellbeing during the likely economic change in the decade to come, government will need to consider how to enable workers to move into growing areas of the economy, and support those who get displaced.”