The ‘hour glass’ economy?

hourglassA recent report from Resolution Foundation (www.resolutionfoundation.org/publications/polarising-crisis/) confirms a number of trends seen to be taking place in the labour market. Particularly that the number of low-skill jobs created  post recession exceeds the number of those  considered  high-skill and that the downturn has accentuated the decline of ‘routine’ and ‘middle-skill jobs’ –  more likely to disappear as a result of increased automation and the use of information technology.

The report provides further data on changes in employment across different industries. A huge increase since 2008 in  employment in ‘Hotels and restaurants’ (218,000 new jobs) for example, with ‘health and social work’ also expanding rapidly (314,000). Meanwhile, a further 262,000 jobs have been shed in manufacturing. A loss of 271,000 Public Administration and Defence jobs also reflects current government cuts in these areas.

Overall employment in the lowest skilled (and lowest paid) third of the UK economy increased by 190,000 compared with a 169,000 fall in the ‘middle’.  The increase of 139,000 in the highest third is largely the result of 461,000 new jobs in ‘Business activities’ but this occupational area,  ranking well in terms of mean average salary, also  includes a huge variety of different jobs  with enormous differences in pay.  In other words, arguments about the growth of an ‘hour glass’ economy or Resolution’s ‘egg timer’ (www.bbc.co.uk/iplayer/episode/b03h6px3/Today_14_11_2013/?t=2h46m39s) need to be approached with caution.

 Evidence from the TUC, for example ( http://touchstoneblog.org.uk/ July 12/13), shows that only about 1 in 5 new jobs have been created in highly paid computer programming and consultancy industries with an average wage of £18.40, compared to the 75% of new jobs created in industries with an average wage of under £7.95. Rather than an hour glass, this points to an increasingly ‘pear shaped’ occupational structure.  Rather than being pulled up, on the contrary, more are being pushed down, with tax returns showing only about 1 in 7 wage earners in the 40% income tax band.  While HMRC statistics show clear shifts in the proportion of income going to those in the top 10% , the shift is far less significant for the top 25% and 50% (http://www.hmrc.gov.uk/statistics/tax-statistics/table2-4.pdf). 

As low-paid industries like ‘Hotels and restaurants’ are also the areas with lowest productivity, compared with manufacturing where productivity increases are more likely to remain high, then Coalition arguments that as the economy ‘recovers’, productivity increases will lead to higher pay cannot be convincing.

Surprisingly, one of the biggest increases in employment has been in education – with 301,000 new jobs since 2008. But according to DfE statistics, the number of teachers has fallen since 2008, while the number of teaching assistants has trebled from 2000 and grown by 20% since 2008 (www.gov.uk/government/publications/school-workforce-in-england-november-2011). This reflects the ‘proletarianisation’ of many professions – rather than their expansion, with deskilling and ‘bite sizing’ of their increasingly ‘flexible’ labour.

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