Unequal Opportunity: the Long-Term Growth in Low-Quality Jobs in UK Cities

A new report from the Centre for Cities, supported by the Joseph Rowntree Foundation, identifies a long-term shift towards insecure, low-paying employment in many cities across the UK, threatening the future strength and stability of the national economy.

Press release published on 4 September 2014

Through analysis spanning from 2001, Unequal Opportunity maps the enormous structural changes taking place in the UK’s labour market, as employment has become increasingly polarised between good and poor-quality jobs, and more Britons are forced into volatile, low-paying employment.

The report finds that:

  • Between 2001 and 2011, the number of Britons employed in low-pay positions in UK cities increased by over 750,000 people, as those in ‘mid-range’ positions decreased by almost 200,000;
  • Over 20 per cent of all UK employees are now working for low pay; and
  • There are now more employed than unemployed UK households in poverty.

Cities in the North are particularly at risk: in Sunderland and Hull, over a third of all employment is now low-paid, and in Blackburn, Grimsby and Hull, one in three workers earn less than two-thirds of the median national wage. Coventry, Luton and Stoke saw the largest increases in the share of low-paid jobs between 2001 and 2011, coupled with the largest decline in the share of intermediate jobs.

“There’s no doubt that low-paying jobs have always existed, and that some UK cities continue to see significant growth in high-paid jobs. But what has changed over the past few decades is that, in many cities, the pathways to upward mobility have been severely eroded, as their jobs markets polarise and the stable jobs of the ‘middle’ begin to slip away,” Ms Alexandra Jones, Chief Executive of the Centre for Cities.

Unequal Opportunity cites globalisation, the increasing integration of technology into businesses, and the decline of manufacturing as having contributed significantly to the “missing middle” – driving many workers into downward mobility.

“For far too long, successive governments have focused on the number, not the quality of jobs being created – but the trend towards low-paying, insecure employment is bad for workers, bad for cities, and bad for the national economy. Lack of opportunities for worker progression threatens to trap workers in poverty cycles from which they, and their cities, cannot escape,” said Ms Jones.

By contrast, in London and the South-East, the growth of internationally competitive knowledge-intensive industries means it is forecast that in ten years, 60 per cent of all jobs in London will be in high-paid employment. But with soaring living costs and house prices, lower-paid workers are expected to find it increasingly difficult to afford to live in the capital.

“Each UK city faces unique challenges in their labour markets, and will need greater flexibility to respond to their specific strengths and weaknesses if the national economy is to truly develop and grow over the coming years. It is clear is that we have entered a new phase, and policy responses to address these changes will need to be bold, innovative, and look to the future – not the past – for solutions,” said Ms Jones.

To build more balanced and resilient labour markets in UK cities, the report recommends:

  • National Government should give cities more flexibility over funding to help them improve business environments (through investment in skill and infrastructure, for example) to support new and existing businesses – including those operating in low-pay sectors – to thrive, create jobs and pay higher wages;
  • The Low Pay Commission should work with cities that have a strong case for introducing a city-region wide minimum wage to examine the potential impacts on employment and local businesses;
  • National Government should enable cities to reduce housing, transport and childcare costs, delivering higher living standards to workers in low-pay occupations by giving them greater regulatory and borrowing powers, alongside greater flexibility over funding; and
  • Cities should encourage employment support organisations to work more effectively with local businesses, training providers and public sector organisations to match training and employment services with local business demand.

Ms Julia Unwin CBE, Chief Executive, Joseph Rowntree Foundation, said:
“Earlier research for JRF has demonstrated the striking growth in working families living in poverty. Economically weak cities are home to increasing concentrations of poor working households, whilst two-tier economies are emerging in our more successful urban centres. Job quality is a burning issue, particularly in low skill, low wage sectors such as retail, hospitality and care. As more cities start leading on growth strategies they must respond as part of this work to the shifts occurring in the labour market. We need new thinking if we are to crack the problems around training, progression at work and job security that seem to keep increasing numbers of people stuck in entry level jobs.”

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