In recent years technology has enabled the rise of new business models like Uber and Deliveroo that, together with the rise of zero hours contracts and agency work, have brought a new set of challenges to the labour market. The Taylor review, published this week, looks at how employment practices should be adapted to these new developments.
Its focus is on how to ensure that all employment is “good work” – that is, safeguarding the income, dignity and wellbeing of workers – while maintaining the flexibility that has been crucial for the UK’s employment-led recovery in recent years (as evident in the labour market statistics out today which indicate a new record high of people in work).
Clearly, having a national regulatory framework that strikes the right balance between flexibility and protection for those in more precarious work would be a welcome development (although for some, including the TUC, the Taylor review didn’t go far enough). But when adopting these recommendations, it’s important that the Government considers the implications of these changes in different parts of the country.
For a start, while debates on these issues have focused on the national level, the reality is that the UK is not a national labour market – rather, it has a series of overlapping local markets, with quantity as well as quality varying across places.
Our work on changing urban labour markets demonstrates that the geography of job security mirrors that of earnings, as low paid jobs tend to be less secure. For example, in Hull, where wages are the 16th lowest among UK cities, only around a third of workers are in secure employment. In contrast, in Derby, the 8th highest city for average wages, almost two thirds are in secure work. Rates of progression, another indicator of job quality and an important theme in the Review, also vary across places with a stronger escalator effect in London or cities with a tight labour market.
This variation has also been demonstrated at the regional level. According to the TUC, the increase in the number of people working on zero-hours contracts, agency and casual work and low-paid self-employment differs across different places, with the North East experiencing the strongest growth in insecure work since 2011. Work by the Resolution Foundation showed that self-employed in precarious sectors tend to live outside the Greater South East. As such, for the Government to implement the Taylor review’s recommendations effectively, it must consider the different impact they will have in different cities and places across the UK.
The review’s recommendation on the introduction of the ‘dependent contractor’ category – by which workers in the ‘gig economy’ would receive more employment rights, including holiday pay – may also play out very differently across places. Evidence from Italy, where a similar category has existed since 1997, suggests that this kind of contract is more common in “slack” labour markets in southern Italy, and largely because workers on secure contracts have been re-categorised, rather than those who are self-employed.
Another issue raised by the Taylor review is potential changes to the minimum wage, to incorporate people on zero-hour contracts and gig economy workers. The Low Pay Commission in the UK already plays an important role in assessing the potential geographic impacts of such changes. If its remit is widened, as recommended in the review, to “make recommendations to Government on what needs to change (including National Minimum Wage rates) to improve quality of work in the UK”, then it must continue to take account of differences between different cities.
But promoting “good work” isn’t just about regulation. There are a wider set of policies that can support and encourage business to create better jobs, and there is a role for cities to play in addressing the local labour market weaknesses, which the Taylor review highlights. Local governments can improve the experience of the low paid across the country, by working with their partners and through initiatives such as Living Wage Campaigns, lifelong learning, job matching and career ladder programmes.
The Centre for Cities will be exploring of all these issues in further detail as part of its upcoming research on the future of work.