Tipping the hourglass: Good jobs and social mobility in the workplace

February 11, 2014

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The rise of the knowledge economy has been well documented but in actual fact, one in four UK jobs still requires no qualifications.

It was a surprise to many at our ‘Good Jobs’ roundtable with Demos that in some sectors, low paid work continues to be the norm. Indeed, over the last three years, almost four fifths of UK jobs created have been in industries where the average wage is below £7.95.

The development of what’s being termed the ‘hourglass economy’ has generated much debate about addressing inequality and promoting social mobility in the workplace and is a key priority for the Social Mobility and Child Poverty Commission, of which I’m part of. And for us, the role of the employer is under the spotlight.

The question is, what can be done differently so that jobs provide more than just a wage and function.  The concept of a 'good job', discussed in our roundtable, examines whether there are further opportunities for individuals to develop higher skills through their work, become more productive and ultimately earn more? The answer is important as it will help address the productivity puzzle and, in turn, raise living standards.

A step change is needed in some industries to encourage employers to take the long view and invest in training, which in turn improves the quality of jobs on offer. We’ve seen a vicious circle in some sectors of employers, and employees, expecting high staff turnover and demanding, and receiving, less loyalty – the result, low pay and low productivity. In order to justify a shift, employers need a business case that investment in skills will bring returns - and ways to overcome the perceived barrier of the loss of investment if staff are ‘poached’.

The importance of employers across particular sectors working together was highlighted, with those who have created ‘good jobs’ collaborating with others, including larger, established organisations to help their smaller counterparts. Our attendees recognised that the pay-off of productivity gains is the prime incentive needed to help employers, particularly SMEs, gain the confidence to invest in skilling up their workforce and take on additional risk when the guarantee of return is critical. The argument is, with a more highly skilled workforce within any one particular sector, the perceived risk of losing the investment made in training staff is diminished. In a deeper talent pool, what goes around comes around, if you like.

Our analysis from Stepping stones to growth showed that in 2011, the GDP per hour worked in the rest of the G7 economies was 16% higher on overage than that in the UK.  10% higher hourly productivity - whether through the right skills, job structure, employer training or engagement, would be the equivalent of £140bn extra GDP ever year to the UK.  As economists continue to mull over the question of rising employment in a slow growth economy, the low productivity conundrum of our labour market is moving centre stage.

In the lead up to the next general election (and beyond) employers will be expected to play an active role in solving this puzzle.

Paul Cleal
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