Brexit and Fulfilling Work: Responding to Threats and ......Training and Employment Research Unit...
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Report by Alan McGregor for CUKT
Brexit and Fulfilling Work: Responding to Threats and Exploiting Opportunities
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ACKNOWLEDGEMENTSReport by Alan McGregor for CUKT
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Contents
Acknowledgements
Foreward
1. Summary
2. Fulfillingworkandwhyitmatters
3. FulfillingworkintheUK
4. ImpactofBrexitonfulfillingwork
5. Mitigatingthreatsandexploitingopportunities
6. Annex:Approachtostudy
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES4
Acknowledgements
TheauthorisgratefultoTheocharisKromydasfromtheAdamSmithBusinessSchoolattheUniversityofGlasgowforresearchsupportincompilingthetablesandchartsinthereport.Manyindividualsalsogavegenerouslyoftheirtimeforinterviewsandemailexchanges.Finally,staffatCarnegieUKTrustprovidedveryhelpfuldetailedandconstructivecommentsonpreviousdrafts.
5BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
MartynEvansCEO,CarnegieUKTrust
Foreword
TheconsequencesoftheUKleavingtheEUishighlyunpredictableacrossawidearrayofpublicpolicyissues.AgreatdealwilldependonthedetailedarrangementsthatareestablishedtodeterminetheUK’sfuturerelationshipwiththeEU.ItfollowsthattheimpactofBrexitonthewellbeingofUKcitizensisuncertain.WehavethereforecommissionedaseriesofexpertstoconsidertheimpactofBrexitontheTrust’sthreekeythemes:digitalfutures,fulfillingworkandflourishingtowns.
Inthispaper,AlanMcGregor,ResearchProfessorofEconomicDevelopmentattheUniversityofGlasgow’sTrainingandEmploymentResearchUnit(TERU),providesanindependent,expertperspectiveonthepotentialthreatstofulfillingworkarisingfromBrexit,andassessestheimplicationsandopportunitiesofeachoftheseissuesforfulfillingwork.
Thepurposeofthepaperisnottoprovideadefinitivepositionontheseissuesbutrathertoserveasastartingpoint–orguide–toawiderangeofpublicpolicyissuesthatcaninformtheTrustandothersonpossiblenextstepsandprioritiesforfulfillingworkintheUK,irrespectiveoftheformthatBrexittakes.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES6
1. Summary
Fulfilling Work and Why it MattersTheCarnegieUKTrustdefinesfulfillingworkintermsofavailabilityofwork,qualityofworkandwellbeingassociatedwithwork.Fulfillingworkexertsapowerfulinfluenceonindividualwellbeingbyofferingasenseofpurpose,socialconnectionsandpersonalagency,aswellasgeneratingwidereconomicandsocietalbenefits.
Fulfilling Work in the UKMajorforcesimpactingnegativelyonfulfillingworkintheUKoverthelongtermhaveincludedtechnologicalchange,increasedcompetitionfromoverseaslabourduetoglobalisation,andtheriseofneo-liberalpoliciesintheUKreducingthepoweroftradeunionsandencouraginglabourmarketflexibility.Majorrecessions,suchasinthe1980sandsince2008,shiftthebalanceofpowertowardsemployersandexacerbatethelong-termtrends.
Sincetheonsetoftherecessionin2008,employmentgrowthhasbeenparticularlystronginpart-timeemploymentandself-employment.Temporaryemploymentwasindeclinepriorto2008butsubsequentlysurged.Withinthetemporarycategory,jobswithzerohourscontactshaverisenquitedramaticallyinpercentagetermsbutmakeuponlyalittleover3%ofalljobs.Intermsofaccesstojobs,inlinewithpreviousrecessions,employmentratesformoredisadvantagedgroupsdeclinedbuthavesubsequentlyrecoveredformostgroupswiththemajorexceptionofpeoplewithnoorlowqualifications.
OninternationalcomparisonswithotherOECDeconomies,theUKisinthelowerhalfoftheleaguetableinrelationtojobinsecurity,butclosetomid-tableforearningsquality.TheUKperformswellonhardoutcomesassociatedwithhealthandsafetyintheworkplace,butcomparesverypoorlyonmeasuresofworkplaceparticipationandemployeeengagement.
Impact of Brexit on Fulfilling WorkItishardtoassessthepotentialimpactsofBrexitonfulfillingworkfortwomainreasons–thepreciseformthatBrexitwilltakeremainsuncertain,andtheeventitselfisclosetounprecedented,meaningthelessonsofhistorycannotbedrawnupon.Theapproachadoptedinthisreportinvolvedanextensivereviewoftheliterature,togetherwithinterviewswitharangeofindependentexperts.MostoftheresearchliteratureworksontheassumptionthattheUKleavestheSingleMarket,takescontrolofmigrationfromtheEUandsetsitsownregulationsinrelationtoworkplacematters.
FourissuesofimportancetofulfillingworkintheUKwereexamined.Thesearediscussedbelow.
Issue 1: Size and Structure of UK EconomyThereisanearconsensusamongindependentexpertsthatBrexitwillleadtoslowergrowthinthesizeoftheUKeconomyandinemploymentlevels.ThiswillbedrivenbyreducedratesofgrowthinUKexportsandlowerforeigndirectinvestmentintotheUKasaresultofleavingtheSingleMarket.Ifoverallglobalgrowthtrendsremainstrong,thiscouldmeansimplythattherateofgrowthofUKemploymentwoulddecline.Nevertheless,theprognosisisaweakeningoflabourdemand–andthistendstobeassociatedwiththepersistenceoftemporaryworkandothermanifestationsoflowerjobquality.
7BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
Issue 2: Levels of In-migration and Return MigrationOneofthemosthighprofileissuesintheBrexitreferendum,andalikelyoutcomeoftheprocess,isareductioninmigrationfromtheEUtofilllowerskilledjobopportunities.However,therearegrowingconcernsintheemployercommunitythatthiswillbeaccompaniedbyhigherratesofreturnmigration.Theconcernisthatthe2.4millionEUmigrantscurrentlyemployedintheUKtendtobeconcentratedinspecificoccupations,sectorsandregions.Becauseofthis,specificbusinessesmayfacerecruitmentchallengescausingthemtorelocate,downsizeorclose.AlthoughthemostrecentstatisticsshowfewerEUmigrantscomingintotheUKandmoreleaving,thein-migrantsexceededthereturnmigrantsby100,000overthelastfullyear.Additionally,ifBrexitdoesimpactadverselyonemploymentlevelsasdiscussedabove,thenlaboursurplusandnotshortagewillbecometheproblemintheUK.
Onthepositiveside,thepotentialreductioninlaboursupplyforlowerskilledjobsdoesoffergreaterscopetoincreaseemploymentratesforthosewhohaveoftenexperiencedthemostdifficultyinaccessingthelabourmarket.Additionally,anumberofindependentanalystsaresuggestingthatemployersfocusedmoreonlowerskillsmaybeforcedtoincreaseearningsandimproveconditionstoretainandattractworkers.
Issue 3: Employment Protection Laws and RegulationsThedominantviewofindependentcommentatorsisthatmembershipoftheEUhassignificantlyenhancedworkers’employmentrightsandprotections.TheimportanceofthiscontributionisreinforcedbyinternationalcomparisonsthatshowthattheUKisweakinrelationtothelabourmarketinstitutionsthathelpinmitigatingtheforcesthatdrivethepolarisationofthelabourmarketandreductionsinjobquality.Thereisnocompellingevidencetosupportthecontentionthatreducedemploymentprotectionregulationwouldhelpstimulatetheeconomy,andindeedthismaymakeithardertosecurenewtradedealsinthefuture,withnegativeconsequencesforexportingandemployment.
Issue 4: European Structural FundsEuropeanStructuralFundshaveprovidedsubstantialfundingfortheUK’slaggingregions,andforunemployedpeoplewithmorechallengingissuestryingtosecureandsustainemployment.ThirdsectororganisationsworkingwithmoredisadvantagedgroupsofthepopulationaredeeplyconcernedthatwithoutEuropeanSocialFundmonies,manyoftheircriticalservicescannotbesustained.
However,atleasthalfofthefundingcomesdirectlyfromUKpublicsectorbodiesasmatchfunding.Additionally,thebureaucracyassociatedwithEUfundinghasbeenseverelycriticisedinmanyreports,andtherearealsodoubtsabouttheimpactsofESFandStructuralFundsmoney.ThereisscopetodobetterifexistingUKfundingcanberolledforwardandpossiblyenhanced.
Mitigating Threats and Exploiting OpportunitiesThereportsuggestsanumberofgeneralandspecificactionstodealwiththethreatstofulfillingworkposedbyBrexit,andproposalsonhowtomakethemostofsomeoftheopportunities.Thesearesetoutconciselybelow.
General Actions Required Irrespective of Brexit Outcome1. BuildontheTaylorReviewtoimplementaraftofmeasureswithinastrategicframeworkfortackling
employmentpracticeswhichimpactnegativelyonjobqualityandfulfillingwork.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES8
2.Governmentandthepublicsectormoregenerallyshouldusetheirprocurementleveragetofavourbusinessesoffering‘goodwork’totheiremployees,reducingthedemandforgoodsandserviceswherethebusinessmodelisbuiltaroundlowpay,insecureemploymentandpoorconditions.
3.AspartofastepchangeintheUK’ssupply-sideinfrastructure,reducesignificantlytheUK’shighvolumeofworkingagepeoplewithnoorlowqualifications–nearly8millionin2016.Thisisthelabourforcethathelpssustainbusinessesorganisedaroundoffering‘poorwork’.
Brexit Issue: Rising Unemployment if Economy Shrinks4.Theevidenceisclear-buoyantlabourmarketshelppromotefulfillingwork.Ifleadingindicators
suggestthatthepost-BrexitUKeconomyisheadedforlowornogrowth,orevendecline,themacro-managementoftheUKeconomywillneedtomovequicklyanddecisivelyawayfromtheausterityapproachadoptedin2010.
Brexit Issue: Declining EU Migration 5.Specificoccupationalareas,sectorsandregionsaremoredependentthanothersonworkersfrom
theEU.Targettheseareaswithemployabilityandskillsinterventionstodevelopareplacementlaboursupply,drawinginparticularonthemoredisadvantagedsectionsoftheworkforcewhohavedifficultyaccessingemployment.
6.SupportemployerscurrentlywithahighdependencyonEUworkerstoimprovethequalityoftheirjoboffer,andsoenhancetheircapacitytorecruitandretainworkers.Thiswouldinvolvesomeformofbusinessdevelopmentsupport,andtherearemanymodelstodrawon.
7.Combinetheabovetwomeasuresinasmallnumberofpilotsfocusedonspecificsectorsand/orgeographies.Theplanningforthesecouldbeginnow.
Brexit Issue: Threats to Employment Protection8.Usingfulfillingworkastheorganisingconcept,developanevidence-basedmanifestoonwhyit
isessentialtokeepandbuildupontheemploymentprotectionsgainedduringtheUK’speriodofmembershipoftheEU.Thiscouldbeusedacrossarangeofcampaigns.
9.CreateaFulfillingWorkImpactAssessmenttobeusedwheneveranyemploymentprotectionlaworregulationisbeingreviewed.Thiscouldbuildoutfromtheevidence-basedmanifestodiscussedabove.
Brexit Issue: Loss of European Structural Funds10.Campaignto,attheveryleast,retaintheUKpublicsector’smatchfundingcomponentofthe
StructuralFundsbeyond2020,andinvestthisinanewBrexitEconomyandLabourMarketAdjustmentFund.Thiswouldbefocusedonregionsandsub-regionsmostadverselyimpactedbyBrexit.Thiswouldsupportfulfillingworkbyseekingtomaintainahealthydemandforlabourintheseareas.
9BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
2. Fulfilling Work and why it
What is Fulfilling Work?TheCarnegieUKTrusthasidentified‘FulfillingWork’asoneofitsthematicprioritieswithinits2016-2020StrategicPlan.In2016,theTrustpublishednewresearchexaminingthedifferentaspectsofwhatmightbedefinedasfulfillingwork,includingjobavailability,jobqualityandworkandwellbeing.1
Thesethreeaspectsaredefinedasfollows:
• AvailabilityofWork-‘Howeasilyandfairlycanpeoplefindthetypeandlevelofworktheywouldlike?’• QualityofWork-‘Doterms,conditionsandopportunitiesatworkmeetpeople’sexpectations?’• WorkandWellbeing-‘Dowiderfactorsaroundengagement,connectionandagencyatworksupport
personaldevelopmentandfulfilment?’
Althoughsetoutasindividualelements,itisnotdifficulttoseetheconnectivitybetweenthedifferentelements.Forexample,itislikelythatsometypesoflowqualityworkaremorereadilyavailabletojobseekers,butinalabourmarketwhichishighlysegmented,withgroupssuchasdisabledpeoplesufferingsignificantbarrierstoemployment,therewillstillbesignificantcompetitionforlowqualityjobs.Itisalsolikelythatinsomeinstanceslowqualityworkwillbecorrelatedwithlowlevelsofwellbeingintheworkforce.Forexample,theinsecurityassociatedwithzerohourscontractsmaybeexpectedtohaveadetrimentaleffectonwellbeingforsomeoftheemployeesonthesecontracts.
Moredetailedfeaturesofeachoftheaspectsoffulfillingworkaredescribedbelow.Thistabledemonstratesclearlytheconsiderablecomplexitylyingbeneaththeconcept,butalsothespecificareaswhereactionisrequiredtomakefulfillingworkthenorm.
1 Ormston,R.,andHope,S.(2016).WorkandWellbeing.ExploringDataonInequalities.CarnegieUKTrust.
matters
Availability of work
Work + Wellbeing
Quality of Work
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES10
QualityofWork WorkandWellbeing AvailabilityofWork
Income and pay Personalagencyandemployeeengagement
Job-seekingbehaviour
Termsandconditions Work-lifebalance Benefitssanctions
Jobsecurity Management support Discrimination
Opportunitiesforprogressionandtraining/skillsdevelopment
Socialconnectionsthroughwork Overorunderemployment
Workwith‘meaning’
Jobsatisfaction
Source: Ormston and Hope (2016)
Why Fulfilling Work MattersThetableaboveindicatesmanyofthereasonswhyfulfillingworkexertsapowerfulinfluenceonindividualwellbeing.However,fulfillingworkalsogenerateswidereconomicandsocietalbenefit.
TheLinktoInequalityInequalityisincreasinglyconsideredtoexertnotonlysignificanthumanandsocialcosts,butalsoadampeningeffectonproductivity,economicgrowthandtheprosperityofsocietyasawhole.2 In terms ofthelabourmarket,inequalityinrelationtothedistributionoftheburdenofunemploymentisalongstandingconcern,andearningsinequalityisonespecificcomponentoffulfillingworkandjobqualitymoregenerally.However,asthecollectioneditedbyFelstead,GallieandGreendemonstratesconvincingly,inequalityinjobquality morebroadlydefinedisacentralfeatureoftheUKlabourmarket.3
ManyregionsoftheUKarenowcharacterisedbyalowskillsequilibriumwherethedemandforandsupplyofskillssettlesatarelativelylowlevel,andthisfeedsthroughintotheUK’slaggingproductivityperformance.Ashiftinstructureisrequiredtowardshighskilledorhighproductivityjobs.AdefiningcharacteristicoftheUK(whichitshareswiththeUS)isgreatinequalityinlabourmarketopportunitiesandoutcomes.Additionally,inequalityinlabourmarketoutcomesacrossregionsandsub-regionsoftheUKhaspersistedovermanydecades.4
Thelinksbetweentheeconomy,thelabourmarketandinequalityareincreasinglybeingframedwithinthenotionof‘InclusiveGrowth’.5Essentially,thisinvolvestryingtospreadthebenefitsofeconomicgrowththrougharangeofmeasurestoallpartsofthepopulation.
2 Stiglitz,J.(2012).ThePriceofInequality:HowToday’sDividedSocietyEndangersOurFuture.London:AllenLane.;Ostry,J.,Berg,A.andTsangarides,C.(2014).Redistribution,InequalityandGrowth.IMFStaffDiscussionNote.
3 Felstead,A.,Gallie,D.andGreen,F.(eds).(2015).UnequalBritainatWork.Oxford:OxfordUniversityPress
4 Amior,M.andManning,A.(2015).ThePersistenceofLocalJoblessness.CentreforEconomicPerformanceDiscussionPaper1357,LSE.
5 RSA(2017).InclusiveGrowthCommission:MakingOurEconomyWorkforEveryone
11BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
TheLinktoProductivityThereisgrowingevidence,summarisedbyRogersandRichmond,thatfulfillingworkcangeneratebottomlinebenefitsforbusinessesthroughincreasedemployeeperformanceleadingtohigherproductivityandprofitability,butalsosimpleroutcomessuchaslowerlabourturnoverandlowerabsencerates.6Thiscaninturngenerateproductivitygainsacrosstheeconomy.TheUK’slowproductivity,particularlypronouncedsincetheonsetoftherecession,isasignificantdragoninternationalcompetitivenessandearningsgrowthwithinthelabourmarket.
ThePublicCostofPoorWork Therearemanystudiestoshowthatpoorandstressfulworkingconditionscanimpactnegativelyonbothphysicalandmentalhealth(forexample,NolanandWhelan).7OECDsummarisesarangeofevidencethatdemonstratesconvincinglythewiderangeofadverseoutcomesformentalandphysicalhealththatcanresultfromjobstrain.8ChandolaandZhangsuggestthatmovingfromunemploymentintopoorqualityworkisassociatedwithhigherlevelsofchronicstress–relatedbiomarkersrelativetothoseremainingunemployed.9
Thereisawiderdebatearoundtheinteractionbetweenlowwagesandpoorjobqualityontheonehand,andthetaxandwelfaresystemsontheother.Thisincludesthepotentialroleofworkingtaxcreditsinsubsidisingthelaboursupplytoemployersofferingpredominantlylowwageopportunities.10Additionally,attentionisnowalsobeingdirectedtotheroleoftheUKtaxsysteminincentivisingemployerstooffercertaintypesoflowqualityjob,forexampletreatingworkersasself-employedwhoareforallintentsemployeestoavoidpayingnationalinsurancecontributions,butalsoholidayandsickpay.Thisissometimestermed‘bogusself-employment’.Thispracticeis,however,notrestrictedtoemploymentinthelowerregionsofthelabourmarket.11
Thestronggrowthofself-employmentalsoposesproblemsfortaxrevenues.Onaverage,theself-employedearnlessthantheemployedandaretreatedmorefavourablyintermsofwhatcanbeoffsetagainsttax,bothofwhichreducethetaxbase.12Additionally,theaveragerealearningsoftheself-employedhavefallenbymorethanaquartersincetheonsetoftherecession,morethantwicethedeclineinemployeerealearnings.13
TheseissueswereaddressedbytheTaylorReview,14whichwascommissionedtoinvestigatehowemploymentpractices,someofwhichimpactadverselyonthequalityofwork,needtochangeinordertokeeppacewithmodernbusinessmodels.Amongmanyrecommendations,theTaylorReviewcalledforgreaterequalitybetweentheemployedandself-employedintermsoftaxation,aswellasaccesstostate-basedentitlements.TheReviewalsorecommendedaclarificationofthelegaldefinitionsof‘employee’,‘worker’and‘self-employed’.
6 Rogers,G.,andRichmond,K.(2016).‘Fairworkandproductivity’.FraserofAllanderInstituteEconomicCommentary,December.
7 Nolan,B.,andWhelan,C.(2014).‘TheSocialImpactofIncomeInequality:Poverty,DependencyandSocialCohesion’.InSalverda,W.etal.(Eds).ChangingInequalitiesinRichCountries.Oxford.OxfordUniversityPress.
8 OECD(2014).OECDEmploymentOutlook2014.
9 Chandola,T.andZhang,N.(2017).‘Re-employment,JobQuality,HealthandAllostaticLoadBiomarkers:ProspectiveEvidencefromtheUKHouseholdLongitu-dinalStudy.’InternationalJournalofEpidemiology.
10 Schmitt,J.(2012).LowWageLessons.CentreforEconomicandPolicyResearch
11 Boheim,R.andMuehlberger,U.(2006).DependentFormsofSelf-EmploymentintheUK:IdentifyingWorkersontheBorderbetweenEmploymentandSelf-employment.IZADiscussionPaper,No1963.
12 TUC(2017a).TheImpactofSelf-EmploymentonInsecureWorkandthePublicFinances.
13 DepartmentforBusiness,InnovationandSkills(2016).TheIncomeoftheSelf-Employed.
14 TaylorReview(2017).GoodWork.TheTaylorReviewofModernWorkingPractices.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES12
3. Fulfilling Work in the UK
Thepurposeofthissectionisto:• ExploresomeofthechangesovertimeinrelationtofulfillingworkintheUK.Thiswillestablishthe
directionoftravelagainstwhichtheimpactsofBrexitmaybeassessed.• Considersomeofthekeyexplanationsforthesechanges.
Explanations of Long Run Change Leadingexperts15haveanalysedthechangingpositiononjobqualityintheUKover25years,focusingonfour key aspects:• Wagesandmonetaryrewards.• Jobprospects,includingmovementsupanddownthejobshierarchy,andtheuncertaintyof
employment. • ‘Intrinsicjobquality’,includingskilllevelsandtheintensityofwork.• Qualityofworkingtime,inrelationtotheneedsoftheemployeeandworklifebalance.
Someofthekeydriversofchangeidentifiedinthestudyarediscussedbelow.
Technologicalchangehasbeenacceleratinginrecentdecades.Thenatureofthechangehasledtoanincreaseddemandforhigherskilledworkers,butareductioninthedemandforthosewithmediumskills.Thisisviewedasamajordriverofthepolarisationofjobs,sometimescharacterisedasthe‘shrinkingmiddle’,‘hollowedout’or‘hourglass’labourmarket.Oneseriousimplicationforthoseinthelowerreachesofthelabourmarketisthattheopportunitiesforprogressionaremuchmorelimitedthanbefore.
Ahighlevelofearningsinequality characterisestheoutcomesoftheUKlabourmarket.Thisisdrivenpartlybythetechnologicalchangesnotedabove,butitalsoreflectsthefactthatthesupplyofskillshasnotbeenkeepingupwiththerisingdemandforskills.
TheriseofglobalisationhasbroughtincreasedcompetitionfromoverseaslabourtotheUKandotheradvancedeconomies,largelythroughtradeandfiercepricecompetitionfordomesticallyproducedgoodsandservices,butalsothroughmigration.Thecompetitionthroughtradehasimpactedsignificantlyonthemanufacturingjobsbase,takingoutmanyjobsinthelowertosemi-skilledrange,andreinforcinglabourdemandchangesresultingfromtechnologicaldevelopments.
Theglobalrecession whichbeganin2008hasshiftedthebalance of power furtherfromemployeestowardsemployers.Initially,asunemploymentqueueslengthenandrecruitmentlevelsfall,employersareconfrontedwithmuchgreaterchoiceintermsofwhotheyrecruit,andonwhattermsandconditions.Whengrowthreturnedtotheeconomy,employmentlevelsbegantorise.However,thiswascharacterisedbyastrongexpansioninpart-timeandtemporaryjobs,andinself-employment,reflectingacontinuingunderlyingweaknessinthelabourmarket.
15 Green,F.,Felstead,A.,andGallie,D.(2015).‘TheinequalityofJobQuality’,inFelstead,A.,Gallie,D.andGreen,F.(eds).UnequalBritainatWork.Oxford:OxfordUniversityPress.
13BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
Manyanalysesofthechangingnatureofthelabourmarketinrecentyearsreflectsimplyanupdatingofsimilarthinkingabouttheconsequencesofthemajorrecessionoftheearlytomid-1980s,whereoneofthekeyfeatureswasasignificantriseintemporaryemploymentandoutsourcingoflabour.16 An additionalprocessidentifiedbylaboureconomistsasfarbackasthe1960sistheimpactof‘bumpingdown’inrecessions,wherehigherandmediumskilledworkerscompeteforlowskilledjobs,placingintensepressureonlabourmarketopportunitiesandearningsforworkerswithlowskills.
Theriseofneo-liberalpoliciesintheUKinthe1980sand1990shelpedreducethepoweroftradeunions,andpromotedthede-regulationofthelabourmarket,withconsequentreductionsinemploymentprotection.AlthoughthesepolicieswererolledbacktosomeextentbytheLabouradministrationfrom1997,withtheaddedsupportofEUdirectives,tradeuniondensitiesdidnotrecoverandtradeunionpowerhasremaineddiminished.Thesechangesarecriticallyimportantasinternationalanalysisplacesastrongweightontheroleoflabourmarketinstitutionsinmitigatingthepotentiallynegativeimpactsofsomeofthekeydriversdiscussedabove.17
Thekeyelementsinrelationtothepositiveeffectsoflabourmarketinstitutionsarecollectivebargainingcoverage,minimumwagelegislation,employmentprotectionlawsandregulations,therobustenforcementofminimumwagesandemploymentprotectionregulations,andmoregenerousoutofworkbenefitswhichplacepressureonemployerstoraisewages.
Meager(2015)summarisesthekeyfindingsoftheGreen,FelsteadandGalliebookinrelationtochangingjobqualityovertime.• Incontrasttocommonperceptions,averagejobtenurehaschangedlittleovertime.• Thequalityofworkingtimehasimproved,intermsofhoursofworkandthecoverageofpaidholidays.• Findingsaremoremixedinrelationtoautonomyintheworkplace.• Therehasbeenariseinworkintensity.• Akeyfeatureistheveryunevendistributionofjobqualitybetweensocialclassesandotherkeylabour
marketgroupings.Additionally,theseinequalitiesmarkouttheUKinrelationtomostinternationalcomparators.18
Interestingly,thereislimiteddiscussionintheacademicliteratureofsupply-sidechangeswhichmighthaveinfluencedtheabilityofUKemployerstosustainrecruitmentandretentionforlowqualityandrelativelyunattractivejobs.Thereareanumberofpossibleinfluencesonthesupplyside.• ThereareargumentsthatWorkingTaxCreditshaveactedasasubsidytooftenmajoremployers
payinglowweeklyearnings.19 • Migrationlevelshaverisensignificantlyoverthelast10-15years.AlthoughmanyEUmigrantsarewell
qualifiedandskilled,mostappeartogointorelativelylowskilledandlowqualityjobs.20Asisarguedlater,theacademicliteratureisalmostexclusivelypositiveontheimpactsofmigrationontheUKeconomyandlabourmarket.However,thereappearstobelimiteddiscussionaroundthecontributionofmigrationtohelpingsustainabusinessmodelinsomesectorsbasedonlowpaidandpoorqualityjobs.
16 Atkinson,J.(1985).Flexibility,UncertaintyandManpowerManagement.TheInstituteforEmploymentStudiesreport89.TheInstituteforEmploymentStudies;McGregor,A.andSproull,A.(1992).‘EmployersandtheFlexibleWorkforce’.EmploymentGazette,100.
17 Fernandez-Macias,E.andHurley,J.(2014).DriversofRecentJobPolarisationandUpgradinginEurope-EuropeanJobsMonitor2014.Eurofound;Schmitt,J.(2012).LowWageLessons.CentreforEconomicandPolicyResearch.
18 Meager,N.(2015).‘IsWorkGettingWorse,andWorsefortheWorkers?’IESViewpoint,Issue22.
19 CitizensUK(2015).PublicSubsidiestoLowWageEmployers:MethodsBriefing;Neumark,D.(2015).‘ReducingPovertyviaMinimumWages,Alternatives’.Fed-eral ReserveBankofSanFranciscoEconomicLetter,December;Schmitt,J.(2012).LowWageLessons.CentreforEconomicandPolicyResearch.
20 Portes,J.andForte,G.(2017).TheeconomicimpactofBrexit-inducedreductionsinmigration.OxfordReviewofEconomicPolicy.33(S1).
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES14
• ‘Workfirst’employmentpolicieshavebeenincreasinglyfavouredbytheUKgovernmentfromtheearly2000s,andtheseplacepressureonunemployedpeopletoacceptpotentiallyunattractivejobsunderthreatofbenefitssanctions.Relativetosimplyfindingajob,qualityofworkhasbeenapoorrelationinemploymentpolicyterms.21
• Smallerinscale,thesubstantialincreaseinhighereducationparticipationunderafinancialregimewherestudentfeeshavereplacedgrantaid,haspossiblyledtoincreaseddemandforpart-timeworking.AddedtothisistheevidenceofsignificantskillunderutilisationaffectinggraduatesintheUK.22
Thecumulativeeffectofthesetrendsdatingback15to20yearscouldbequitesignificantintermsofthebalanceofdemandandsupplyatthelowerendofthelabourmarket.
Changes Since 2000: Some Statistical Evidence Thissectioncapturessomeofthechangesinmorereadilymeasurableindicatorsrelevanttofulfillingwork.Thefocusisontheperiodsince2000,withasplitat2008whichwastheyeartheglobalrecessionfirstimpactedontheUKlabourmarket.
EmploymentAnalysisofstatisticaldataheldbytheOfficeforNationalStatistics(ONS)showsthattotalemployment(includingself-employment)hasgrownsignificantlyovertheperiod2000to2016,up7%since2008,buttherehavebeensignificantvariationsacrossthedifferenttypesofemployment.• Full-timeemploymentgrewstronglyuptotherecession.Therehasalsobeenarecoverypost-recession
andamodestgrowthof3%since2008.• Part-timeemploymentgrewatthesamerateasfull-timeupto2008,butatnearlythreetimestherate
offull-timeemploymentsincetherecession.• Self-employment hasbeenoneofthestrongestgrowthcomponents,withtheincreasesparticularly
marked(24%)sincetheonsetoftherecession.However,thiswasanaccelerationofanexistingtrendwitha19%increasebetween2000and2008.Clearlytherearesignificantpolicyandlegalissuesaroundthedefinitionofself-employment,discussedintheTaylorReview.23Additionally,likeemployment,self-employmentappearstobehighlypolarisedintermsofearningslevels,withahighproportiononlowaverageearnings,exposedtogreatervolatilityinearningsovertimeandlackingmostoftheemploymentprotectionavailableforemployees.24Earlier,itwasnotedthatsincethestartoftherecession,realaverageearningsfortheself-employedhaddeclinedatmorethantwicetherateofemployeeearnings.
• Temporary employment isinterestingasthiswasindecline(downby18%)from2000uptotherecession.ThisreflectswhathappenedwhentheUKlabourmarketemergedfromtherecessionofthe1980s,withemployersforcedtooffermorepermanentemploymenttosecuregoodqualityrecruitswhenthelabourmarkettightened.However,after2008temporaryemploymentsurged,growingby20%.
• Zerohourscontractsareasub-setoftemporaryemployment.Thesehavegainedaveryhighprofilebutaccountforonlyaround3%ofallemployment.Zerohourcontractsfellsubstantially(by43%)inthetighteninglabourmarketleadinguptotherecession,buthaverisendramaticallysince.Thesix-fold
21 Etherington,D.andDaguere,A.(2015).WelfareReform,WorkFirstPoliciesandBenefitConditionality:ReinforcingPovertyandSocialExclusion?CentreforEnterpriseandEconomicDevelopmentResearch,MiddlesexUniversity.
22 Green,F.,andHenseke,G.,(2016).‘ShouldGovernmentsofOECDCountriesWorryAboutGraduateUnderemployment?’OxfordReviewofEconomicPolicy.32(4).
23 TaylorReview(2017).GoodWork.TheTaylorReviewofModernWorkingPractices
24 Hatfield,I.(2015).Self-employmentinEurope.InstituteforPublicPolicyResearch.
15BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
increasesince2008maybeexaggerated,possiblyduetothelowbaseandtheheightenedawarenessofthesecontractsinthemedialeadingtohigherlevelsofreporting.Forexample,thenumbersincreasedrelativelymodestlybetween2008and2010,butdoubledinoneyearfrom2012
Figure1capturesthesechangesdiscussedabove,butzerohourscontractshavebeenexcludedduetotheverywidefluctuationsovertime.
Access to EmploymentFigure1:ChangingNatureofUKEmployment(indexedto2000=100)
Source: ONS
Thebestoverarchingmeasureofaccesstoemploymentistheemploymentrate,whichisthepercentageoftheworkingagepopulationinemployment.AnanalysisofdatadrawnfromONSgeneratesthefollowingconclusions:• Theemploymentratehasrisenovertheperiodsince2000,despitetherecession.Thisisa
straightforwardreflectionoftherisinglevelsofemployment,althoughittakesnoaccountofthechangingqualityandstructureoftheemployment.
• In terms of gender,theemploymentrateforwomenhasgrownatahigherratethanformen.• Theagefiguresclearlyshowalongtermtrendonasignificantscale,with50-64sincreasingly
engagedinthelabourmarket.Thisisareversalofatrendestablishedinthe1980srecession,withearlyretirementtosomeextentencouragedtoreducethepublishedunemploymentstatistics,butitalsoclearlyreflectsproblemsinrelationtopensionsunderliningtheneedformanypeopletokeeponworking.
80
90
100
110
120
130
140
150
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
self-employed (Q2) full time employees (Q2)
part time employees (Q2) temporary employees.(Q2)
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES16
Thegroupswithlowemploymentrates(seeFigure2)arethosetypicallydescribedasdisadvantagedinlabourmarketterms,duetodiscriminationandotherfactors.IncreasingtheemploymentratesforthesegroupscanplayanimportantroleinrespondingtoanyissuesaroundincreasedrecruitmentproblemsandlabourshortagesshouldmigrationlevelsfallsignificantlypostBrexit.• Lessthan50%ofdisabledpeople areemployed–butthefiguresshowaninterestingperspective
whichagainrepeatsanalysisofthe1980sand1990s.25Asthelabourmarkettightens,someemployersareforcedtochangetheirrecruitmentsourcesandpatterns.Thesignificantgrowthinemploymentratesfordisabledpeoplebetween2000and2008reflectsthisbehaviour.Withtheonsetoftherecession,theemploymentratefordisabledpeopledippedbuthassubsequentlybeguntorecover,althoughchangingdefinitionsofdisabilityinthesurveytoolscomplicatetheanalysis.
• Asimilarpatterncanbeobservedforemployeesfromminorityethnicgroups,butherethedipintheearlyyearsoftherecessionwaslessevident.Theemploymentrateforminorityethnicgroupshasrisenfromaround56%in2000to64%in2016.
• Thosewithnoorlowqualificationsseemtohavefaredworstthroughtherecession,withtheiremploymentratefallingfrom64.4%in2008to62.5%in2016.
Narrowingthegapinemploymentratesformoredisadvantagedgroupsinthelabourforcerelativetotheaverageemploymentratehassignificantwin-winpotential.• Byraisingtheeffectivenessofthelaboursupply,thecompetitivenessoftheeconomyisenhanced,
helpingtopromoteproductivityandgrowth.• Byraisingtheemploymentratesofthemoredisadvantagedgroups,theprospectsofmoreinclusive
growth areimproved.
Figure2:EmploymentRatesforSpecificGroups,2016
Source: ONS, Eurostat
25 Berthoud,R.(2007).Work-RichandWork-Poor:ThreeDecadesofChange.PolicyPress/JosephRowntreeFoundation.
48.4
62.5 63.969.6 70.7
74.5
Disabled No/LowQualifications
Ethnicminorities
Female 50-64 Total
17BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
EarningsLevelofpayisclearlyanimportantelementoffulfillingwork.• Overtheperiodfrom1986to2008averagerealearningsrosesteadily.However,subsequenttothe
onsetoftherecession,realearningsfellsharply.26 • ‘Earningsquality’ismeasuredbytheOECDbasedonrealaverageearningsandinequalityof
earnings.27AnalysisofOECDdatafor2005to2014showsthatfortheUK,earningsqualitypeakedaround2007butthendeclinedthroughtherecessionandtheperiodofrecovery.
• Thedeclineinearningsqualityisexplainedbythefallinrealaverageearningsratherthanchangestoearningsinequality.Theproportiononlowwages,usingtheOECDmeasureoftwothirdsofmedianearnings,hasremainedreasonablysteadyatalittleabove20%fortheprevious20years.28
Figure3:UKEarningsQuality(Indexedto2005=100)
Source: OECD Data
Labour Market InsecurityTheOECD29calculateslabourmarketinsecurityonthebasisoftheriskofbecomingunemployedandthecompensationforunemploymentshoulditoccur.AnalysisofOECDdatafortheUKcoveringtheperiod2007-2013indicatesthatlabourmarketinsecuritysurgedin2008butbegantodeclinefrom2011,inlinewithasustainedfallintheriskofunemploymentasindicatedinFigure4.Giventhecutoffpointforthedata,itisnotpossibletosaywhetherlabourmarketinsecurityintheUKhasnowdeclinedtopre-recessionlevelsbutasof2013,labourmarketinsecuritywasstillaround30%higherthanin2007.
26 Green,F.,Felstead,A.,andGallie,D.(2015).‘TheinequalityofJobQuality’,inFelstead,A.,Gallie,D.andGreen,F.(eds).UnequalBritainatWork.Oxford:OxfordUniversityPress.
27 OECD(2014).OECDEmploymentOutlook2014
28 Clarke,S.andD’Arcy,C.(2016).LowPayinBritain2016.ResolutionFoundation.
29 OECD(2014).OECDEmploymentOutlook2014.
94.0
96.0
98.0
100.0
102.0
104.0
106.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Earnings quality (in constant prices, at constant PPPs) Average earnings (hourly earnings in constant prices, at constant PPPs) Earnings inequality
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES18
Source: OECD Data
QualityofWorkingEnvironmentTheOECDmeasurementofthequalityoftheworkingenvironment(OECD,2015)iscomplex,basedonthetwinconceptsofjobdemandsandjobresources(whichincludeautonomyandsocialsupportintheworkplace).Eachoftheseconceptsisinturnmeasuredbyanumberofindividualindicators,whichmakesitchallengingtopresenttheresultsusinggraphs.AnalysisofOECDdatafortheUKfor2005,2010and2015suggeststhefollowing:• Thebigchangeswerebetween2005and2010.Inparticular,jobdemandsandphysicalhealthrisk
factorsincreasedandsocialsupportatworkdeclinedverysignificantly.Ontheotherhand,timepressuresdeclinedandworkautonomyandlearningopportunitiesincreased.
• By2015,thelevelofjobdemandsandphysicalhealthriskfactorsdeclinedandanincreaseinsocialsupportatworkwasexperienced–buttheoverallpositionwasstillmuchpoorerthanbeforetherecession.
Thispatternisconsistentwiththekindsofimpactsthatwouldbeexpectedinaperiodofsevererecession,butthefailuretorecoverpre-recessionoutcomesby2015isconcerning.
How Does the UK Compare With Other OECD Countries?Thissectionlooksattheevidencefromacademicstudies,butalsoOECDstatisticsonvariousaspectsofjobquality.TheoverarchingviewfromthecomprehensiveanalysesinthebookeditedbyGreen,Felstead,andGallieisthattheUKhas greaterinequalityinjobqualitycomparedtomostothercomparatoreconomies.Someofthedifferentelementsofjobqualityarediscussedbelow.30
LabourMarketInsecurityInternationalcomparisonsusingOECDdataonlabourmarketinsecuritygeneratethefollowingfindings.• TheUK,perhapssurprisingly,isinthelowerhalfoftheleaguetable–andthesamecouldbesaidfor
theUnitedStates–asbotheconomieshaverelativelylowunemploymentrates.However,thenatureoftheemploymentopportunitiesavailableclearlycomesintoplayhere.
30 Felstead,A.,Gallie,D.andGreen,F.(eds).2015.UnequalBritainatWork.Oxford:OxfordUniversityPress.
100.00
110.00
120.00
130.00
140.00
150.00
160.00
170.00
2007 2008 2009 2010 2011 2012 2013
Labour market insecurity Unemployment risk Unemployment insurance
Figure4:UKLabourMarketInsecurity(Indexedto2007=100)
19BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
• ThereissignificantdispersionacrosstheEUeconomies,possiblyreflectingtheunderlyingeconomicfragilityofsomeoftheseeconomies.
WhateveroverallemploymentprotectionmeasuresareinplaceinrelationtoEUregulations,backedupbyinvestmentthroughtheEuropeanSocialFund,theimplementationappearstovaryacrossmemberstates.
EarningsQualityOntheOECDmeasureofearningquality,whichlooksatbothaverageearningsandtheincidenceoflowpay: • TheUKisclosetomidtablefortheOECDeconomies,butthisisduetoreasonablyhighaverage
earnings.• Intermsoftheproportionofemployeesinlowwagedwork(seeFigure5),theUKfigureof20%is
relativelyhighoninternationalcomparisons;howeverthefigureforGermanyis18%.ThereisagainaverysubstantialvariationacrossEUmemberstatesonthisspecificindicator,withGermanyandtheUKmuchclosertotheUSthantomanyoftheirEUcompatriots.
HighlevelsofGDPandGDPgrowthclearlydonotautomaticallyreducetheincidenceoflowpay.
Figure5:ShareofEmployeesinLow-wageWork,SelectedEconomies2014
Source: OECD
Note: Data for all countries are from 2014 except Canada, the UK and United States which is from 2015 and Spain which is from 2012.
25.1
25.0
22.2
20.3
19.9
18.4
17.9
16.6
15.9
14.6
13.9
13.9
8.4
8.4
7.6
3.4
0.0 5.0 10.0 15.0 20.0 25.0 30.0
Ireland
USA
Canada
Portugal
UK
Germany
Greece
Australia
Austria
Spain
Japan
New Zealand
Finland
Denmark
Italy
Belgium
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES20
WorkingConditionsandEnvironmentAsnotedearlier,thereareanumberofdifferentelementsusedbyOECDandothersinassessingworkplaceconditions.• TheUKscoresrelativelywellagainstoverallindicatorsofjobstrainandjobresources. • Intheimportantareaofhealthandsafety,theUKperformsextremelywellincomparisonsacrossthe
OECDonhardoutcomessuchasfatalities,non-fatalinjuriesandreportedhealthproblems.• On a range of measures of workplaceparticipationandemployeeengagement,involvingsuch
measuresastradeuniondensitiesandcollectivebargainingcoverage,theUKscoresverybadlyrelativetoEUcounterparts.Thisisanimportantareaofdeficit,asresearchdiscussedearlierinthisreportnotedthestronginternationalevidenceonthegreatvalueoflabourmarketinstitutionsinmitigatingtheworstimpactsofthemaineconomicdriversbehindthepolarisationofthelabourmarket.
OverviewTheanalysisofthestatisticalevidencebaseproducesamixedpictureofwhathashappenedtothequalityofworkmovingintoandthroughtherecession.Likewise,theUK’scomparativerecordonjobqualityacrosstheOECDismixed.Whatisclear,however,isthatthereismuchtobedonetoincreasetheincidenceoffulfillingworkacrosstheUK.
ThenextsectionturnstotheissueofthepotentialimpactofBrexitonfulfillingworkintheUK.
21BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
4. Impact of Brexit on Fulfilling Work
TheobjectiveistoconsiderarangeofpotentialimpactsarisingfromtheUK’sexitfromtheEU,whichmayhavepositiveandnegativeimplicationsforfulfillingwork.Byconsideringthepotentialchanges,abaseiscreatedforidentifyingpoliciesandinterventionstomitigateonthedownsideandmakethemostofopportunitieswheretheyarise.Thediscussionisorganisedinthefollowingway:• KeypotentialissuesarisingfromBrexitareidentified,followedbyanoverviewandanalysisofeach
issueandthepotentialimpactsofBrexit.• Theimplicationsofeachoftheconsequencesforfulfillingworkarethenexplored,differentiating,
wherepossible,betweenpotentialimpactsonjobquality,workandwellbeingandaccesstowork.
ContextAcriticalstartingpointforthisanalysisisthatitisextremelydifficulttoassesstheconsequencesofBrexitfortheUKeconomyandlabourmarket.Economistsinanumberofagenciesandorganisationshavebeenworkingonforecastssincewellbeforethereferendum.However,aspointedoutbytheeditorialinanissueoftheOxfordReviewofEconomicPolicyin2017dealingexclusivelywithBrexit,31forecastingmodelsdonotworkwellinasituationwhere:• Theevent–Brexitinthiscase–isunprecedented.Inotherwords,thereisnoorlittlehistorytobuildon.• Thereareawiderangeofimpactsthatneedtobeassessedduetochangesinmicroeconomicpolicy,
trade,migrationflows,sectoralfactors,etc.• TheimpactsofBrexitcouldbespreadoveraverylongperiodoftime.Forexample,negotiations
around trade could take many years to conclude. • Allofthisisinthecontextoftheongoingdevelopmentoftheglobaleconomy,aswellasglobalissues
aroundsecurityandtheenvironment.
However,itiscertainthatunlessthereisavery‘soft’Brexit,therewillbesignificantchanges,particularlyinrelationtotradeandmigration,andpotentiallyinvestmentasaconsequence.• Changestothetradearrangementswillgeneratepotentiallythemostsignificantimpactsonoverall
employmentlevelsandthesectoralcompositionofemploymentintheUK.• InvestmentlevelsarealsopotentiallythreatenedbythedirectandindirectconsequencesofBrexit.
LessForeignDirectInvestment(FDI)maycometotheUKifthereisnocontinuingaccesstotheSingleEuropeanMarket(SEM),andtheremayalsobeareductionindomesticinvestmentwithsomeofthispotentiallytransferringtocontinentalEurope.
• MigrationfromtheEUislikelytobecurtailedtosomedegreeundermostscenarios,inpartdrivenbythepoliticalimpetusgiventothisissuebytheEUreferendum.
OtherpotentialinfluencesonfulfillingworkflowingfromBrexitincludethefollowing:• Changesinareassuchasemploymentprotectionandworkingtime,whicharecurrentlyregulated
throughEUdirectives.• Lossofstructuralfunds,wheretheEuropeanSocialFund(ESF)supportsamajorinvestmentinskillsand
employabilityacrosstheUK.
31 OxfordReviewofEconomicPolicy,33(1).2017.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES22
Issue 1: Impacts on Size and Structure of the UK Economy
OverviewandAnalysisTheconsensusamongeconomicanalystsandforecastersisthatinthemediumtolongterm,BrexitwillimpactadverselyonthesizeoftheUKeconomy.Theseimpactassessmentstypicallyfocusontwomeasures–GrossDomesticProduct(GDP)andGDPpercapita.
Emmersonetal.tabulatetheresultsfromarangeofBrexitimpactstudies.32VirtuallyallprojectareductioninGDPin2030,rangingfrom-1%to7.5%,takingthecentralvaluesoftheindividualforecasts.OnlyoneforecastprojectsapositiveGDPimpact.Theexpectationisthattheeconomywillshrink,andemploymentwillfallasthedemandforlabourdiminishes.Theremayalsobenegativeconsequencesforthegrowthofrealearnings,butthisishardtopredictaspricelevelswillbeimpactedbychangesinexchangerateswhichareverydifficulttomodeloverthemediumtolongterm.Clearlytherehasalreadybeenasignificantdeclineinthevalueofthepound–andrisinginflation–inthewakeofthereferendumresult.
Akeypointtonoteisthattheimpactswillalmostcertainlyvarysignificantlyacrossregionsandlocaleconomies,andthereisacomprehensiveassessmentofthesepotentialimpactsinAthey33 and Centre for Cities.34OneanalysispredictsthatareasintheSouthofEnglandwillbethehardesthit.35
Whatsitsbehindtheseassessments?Productivity,employmentandGDPcanbeimpactedinanumberofwaysthrough:• Shrinkingtradevolumes,• FallingFDI,andpotentiallyalsodecliningdomesticinvestment,and• Reductionsinthemigrantcontributiontotheworkforceandeconomy.
Wediscussthefirsttwoofthesebrieflyinturn.Migrationisexaminedinmoredetailinthenextsectionofthepaper.
Impacts on TradeItisdifficulttoseeanyscenariowhereUKexportswillriseintheperiodaroundtheimplementationofBrexit,unlesstheUKandtheEUcancometoanagreementwheretheUKmaintainsaccesstotheSEM.IftherewereanyadvantagestotheUKfromthedevelopmentofnewtradingrelationshipsthesewouldtakeanumberofyearstobearfruit.Intheshorterrun,thedepreciationofsterlingpost-referendumhasledtonosustainedincreaseinexportsorreductioninimportstodate.36
Thereare,however,clearrisksonthedownsideifexistingtradingarrangementswiththeEUaresignificantlyalteredandleadtoincreasedfrictionstotrade.Thelikelyconsequencesherewouldbeafallinexportsduetonewtariffandnon-tarifftradebarrierswiththeEU.Non-tarifftradebarriersarelikelytogeneratethemoresignificantnegativeimpactsonUKtradeandtheeconomy,asthedevelopmentof
32 Emmerson,C.,Johnson,P.,Mitchell,I.,andPhillips,D.(2016).BrexitandtheUK’sPublicFinances.IFSReport116.InstituteforFiscalStudies.
33 Athey,G.(2017).Brexit:PotentialImpactsforLocalEconomies.MyLocalEconomy.
34 CentreforCities(2017).CitiesOutlook2017.
35 Dhingra,S.,Machin,S.andOverman,H.(2017).TheLocalEconomicEffectsofBrexit.CEPBrexitAnalysisNo.10.LSE.
36 Dhingra,S.andSamson,T.(2017).BrexitandtheUKEconomy.CEPElectionAnalysisEA040,LSE.
23BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
theSEMhasbeenassociatedwithsubstantialreductionsinfrictionstointernalEUtradebysimplifyingcustomsprocedures,aswellasharmonisingregulationsandproductstandards.37
Mostanalysesofdifferentpost-Brexittradescenariosaregenerallyextremelypessimistic.Forexample,Dhingraetal.suggestthat:• IftheUKremainsintheEuropeanEconomicArea(EEA)therewillbea1.3%fallinGDPpercapita,
mostlyduetothereturnofthefrictionstotrade(suchasmoreonerouscustomsprocedures)discussedabove.
• IftheUKleavestheEEAandrevertstoWorldTradeOrganisation(WTO)rules,thefallinGDPispredictedat2.6%-butwithsubstantialnegativeimpactsonFDIwhichmaythenimpactmoreseverelyonGDPthanthereductionintrade.38
ImpactsonInvestmentSeveraldifferenttypesofinvestmentmaywellsufferasaconsequenceofBrexit.
ForeignDirectInvestmentFDIhasbeenimportantfortheUKeconomyinmanykeysectors.Forexample,carmanufacturing,whichisahighproductivityandhighearningssector,islargelydependentonforeigninvestmentandownership.TherearesignificantthreatstoFDIshouldtheUKleavetheSEM.• TheUKbenefitsfromthelargestFDIinvestmentofallmemberstates,inpartduetotheeaseofaccess
gainedtotheSEM.Dhingraetal.estimatethattheSEMhasraisedFDItotheUKbyaround28%.39 • TheEUconstitutesthesinglelargestsourceofFDIfortheUK,anditisdifficulttoseetherationalefor
thiscontinuedhighlevelofinvestmentinacountrywithnoaccesstotheSEM.• Dhingraetal.estimatethatleavingtheSEMwillreducetheUK’sFDIby22%overa10-yearperiod,
withmajorimpactsonrealincomesofapproximately£2,200perhousehold.40
DomesticInvestmentDomesticinvestmentmayalsodeclineforreasonssimilartothosediscussedaboveforFDI.Additionally:• LargeUKbusinessesmayinvestincontinentalEuropespecificallytoretainaccesstotheSEM.• Additionally,UKbusinessesmayrelocatesomeorallfacilitiestocontinentalEuropeforsupplychain
and labour supply reasons. ChangesinthelevelofFDIanddomesticinvestmentarealmostcertaintohavesignificantimplicationsforthesectoralbalanceoftheUKeconomy,andcarmanufacturinglooksveryvulnerable,aswellasfinancialserviceswhereFDIisstrong.
Implications for Fulfilling Work
AllofthesechangescombinedcouldimpactnegativelyandsignificantlyontheagendaforfulfillingworkintheUK,unlessdevelopmentsinthewiderglobaleconomyhelpsustaingrowthinaggregatedemandforlabourandsupportrealearningsgrowth.
• Withregardstotheavailabilityofwork,asdiscussedintheprevioussection,asthelabourmarketslackens,theopportunitiesformoredisadvantagedgroupstoaccessworkdecline.
37 Dhingra,S.,Ottaviano,G.,Sampson,T.,VanReenan,J.(2016a).TheConsequencesofBrexitforUKTradeandLivingStandards.CEPBrexitAnalysisNo.2.LSE
38 Ibid
39 Dhingra,S.,Ottaviano,G.,Sampson,T.,VanReenan,J.(2016b).TheImpactofBrexitonForeignInvestmentintheUK.CEPBrexitAnalysisNo.3.LSE.
40 Dhingra,S.,Ottaviano,G.,Sampson,T.,VanReenan,J.(2016a).TheConsequencesofBrexitforUKTradeandLivingStandards.CEPBrexitAnalysisNo.2.LSE.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES24
• Periodsofsignificanteconomicrecession,suchastheearlytomid-1980sandtheperiodsince2008,havebeenassociatedwithrisesinlessdesirableformsofemployment,suchastemporarycontractsandthesubstitutionofconventionalemploymentcontractswithself-employedsub-contracting.Effectively,asdiscussedearlier,rapidandsubstantialreductionsinemploymentsignificantlydisturbthebalanceoflabourdemandandsupply,givingmorepowertoemployerstoofferlessfavourableworkingconditions.
• Thisplacesgreatimportanceontheconstrainingeffectsofemploymentprotectionandotherformsoflabourmarketregulation,whichisdiscussedlater.
• TherearepotentiallydamagingchangestothestructureofemploymentifUKmanufacturingbecomessubjecttosignificanttariffbarriers.Incarmanufactureanditssupplychaintherearemanyskilledmanualworkingjobswhicharefulltimeandhaverelativelyhighaverageearnings.
• Ontradespecifically,Baldwin,CollierandVenablesarguepersuasivelythatanewbroaderbasedtradepolicyneedstobedeveloped,withagreaterintegrationoftradepolicieswithdomesticeconomicandsocialpolicies.Theyrecommendthat:
‘The British government should recognise that globalisation is acting in new ways and that this requiresnewdomesticpolicyresponses.Specificallysinceitismuchhardertoidentifywhowill win and who lose, and since it is basically impossible to determine precise causes (globalisation, demographics, immigration, robots, technology, climate change, etc.), a new social compact needs to accompany Britain’s new trade policy. Education, infrastructure, regional, technological and industrial policies all need to be more nuanced, nimbler and more tightly focussed on helping losers adjust. The key is to focus on helping workers adapt; to protect workers and communities, not particular jobs and sectors’. 41
• Thedeclineinthequalityofjobsislikelytofeedthroughintoreductionsinwellbeingintheworkplace.Agreatersenseofinsecurityislikelytoprevailwithreductionsinlabourdemand.
Ontheflipsidetothesechallenges,itisdifficulttoseeanyopportunitiesflowingfromareductioninemploymentlevelsinrelationtothefulfillingworkagenda.Therecouldbeanopportunityintermsoftheneedtoviewtradepolicy,industrialstrategyandotherhigherleveleconomicperspectivesthroughthelensofimprovinginclusivityinthelabourmarketandeconomy.TheUKgovernmentmaywellwishtoavoidBrexitgivingrisetoanewsetofnegativeemploymentexperiencesincommunitiesalreadyexperiencinghighlevelsofsocialandeconomicinequality.
Issue 2: Changes to Levels of In-migration and Return Migration
Overview and AnalysisMigrationandtheEconomyThereisextensiveevidencetosuggestthatmigrationimpactspositivelyonanumberofkeycharacteristicsof a successful economy. • Itchangesthedemographicbalancetowardsahigherpercentageofworkingagetototalpopulation.• Ithelpsincreaseproductivitythroughintroducingkeyskillsaswellasattractinghighlymotivated
potentialemployees.• Morespecifically,itcanaddresspersistentskillshortages(forexample,IT)orareaswhererecruitment
difficultiesareendemic(forexample,thecaresector).• Itcanleadtoapositivefiscalcontributionwheretaxreceiptsexceeddemandsonpubliclyfunded
servicesandfacilities.
41 Baldwin,R.,Collier,P.andVenables,A.(2017).‘Post-BrexitTradeandDevelopmentPolicy’.PolicyInsightNo.88,CentreforEconomicPolicyResearch.
25BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
TheempiricalevidenceonthisisalmostexclusivelypositiveinrelationtotheUKeconomy.• PortesandFortearguestronglythatmigrationhassignificantpositivebenefitsforbothGDPandGDP
percapita.42 • Otheranalysts-forexample,Meager43andMigrationObservatory44-agreeaboutthesignificant
positiveimpactonGDP,butinterprettheevidenceassuggestingsmallergainsorneutralimpactsonGDPpercapita.
• Finally,DustmanandFrattiniestimatethatthereisapositivefiscalcontributionfromEUmigrationofaround£2billionperannum.45
OneverylikelyconsequenceofBrexitisreducedlevelsofmigrationfromEUcountries.Additionally,theremaybeahigherrateofreturnmigrationbasedonchoicesmadebyEUcitizenscurrentlyworkingintheUK.TheanalysisfortheyearendingJune2017showsariseof33,000inthenumberofEUmigrantsleavingtheUKcomparedtotheprevious12months.However,itwasstillthecasethatthenumberofEUmigrantscomingtotheUKgreatlyexceededthenumbersleaving–248,000versus122,000.46
EUMigrantsandtheUKLabourMarketBasedondataforApriltoJune2017therewerenearly2.4millionEUmigrantsworkingintheUK,around7%oftheworkforce.47Thenumbershavegrownsignificantlyfrom590,000in2005,doublingto1.1millionin2008anddoublingagainbetween2008and2016.
Thedifferentmeasurementmethodsforcalculatingmigrationfiguresmakeitacomplexprocesstodeterminemigrationinflowsandoutflowsinagivenquarteroryearwithcertainty.48Forexample,ONSestimatedusingsurveymethodsthat,fortheyeartoendSeptember2016,180,000EUcitizensmigratedtotheUKforwork,butintheyeartoendDecember2016theDepartmentforWorkandPensionsissued626,000NationalInsurancenumberstonon-UKEUcitizens.49Thesesubstantialvarianceshavepersistedfor a number of years.
ItisclearthatEUmigrantsmakeasizeablecontributiontotheUK’slaboursupply,andsopotentiallytherearesignificantimpactsontheabilityofemployerstorecruitshouldimmigrationvolumesdecline.
ThegeneralviewamonganalystsisthatEUmigrationhasbeenlargelypositivefortheUKlabourmarket.Petrongolodrawsanumberofpositiveconclusionsfromtheavailableevidenceandpreviousresearch.50 • Atatimeofdemographicchallenge,EUmigrantshavecontributedtogrowingtheworkingage
population,withtheirshareincreasingfrom1.8%to6.3%overthepast20years.Withinthis,EUmigrantshavehigheremploymentratesthanUKborncitizens.
42 Portes,J.andForte,G.(2017).TheeconomicimpactofBrexit-inducedreductionsinmigration.OxfordReviewofEconomicPolicy.33(S1).
43 Meager,N.(2012).‘Lies,DamnedLiesandMigrationStatistics’.IESViewpoint,Issue15.
44 TheMigrationObservatory(2016).‘ProjectUnclear:Uncertainty,BrexitandMigration’.UniversityofOxford.
45 Dustmann,C.,andFrattini,T.(2014).‘TheFiscalEffectsofImmigrationtotheUK’.EconomicJournal,Vol.124,Issue580.
46 OfficeforNationalStatistics(2017a).SourcesofMigrantStatistics.ONSWebsite.
47 OfficeforNationalStatistics(2017d).EmploymentbyCountryofBirthandNationality.August.Availableonlineat:https://www.ons.gov.uk/employmentandla-bourmarket/peopleinwork/employmentandemployeetypes/datasets/employmentbycountryofbirthandnationalityemp06
48 OfficeforNationalStatistics(2017a).SourcesofMigrantStatistics.ONSWebsite.
49 OfficeforNationalStatistics(2017b).MigrationStatisticsQuarterlyReport,February.Availableonlineat:https://www.ons.gov.uk/peoplepopulationandcommu-nity/populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/feb2017
50 Petrongolo,B.(2016a).‘BrexitandtheUKLabourMarket’inBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.CentreforEconomicPolicyResearch.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES26
• MoststudiesconcludethatmigrantshavenotexertedadownwardpressureontheaverageearningsofUKbornemployees.WorkbyNickellandSaleheendidfindasmallbutstatisticallysignificantnegativeimpactontheearningsofunskilledandsemi-skilledservicesectorworkers.A10%riseintheproportionofmigrantsintheseoccupationswasassociatedwithareductioninearningsofcloseto1.9%.51
• ThereislimitedconvincingevidenceofacausalrelationshipbetweenEUmigrationandthelabourmarketprospectsofUKbornmembersofthelabourforce.Wadsworthetal.findthatthisconclusionholdsattheUKlevelandacrosslocalauthorityareas.52
SectoralVariationsTheemploymentofEUmigrantshasincreasedmarkedlyinspecificsectorsandoccupationsintheUKoverthelastdecade.TheMigrationObservatoryreportedthatbetween2006and2014,theEUmigrantproportionoftheworkforcerosefrom3%to9%inmanufacturing,from7%to12%inaccommodationandfood,andfrom3%to7%inconstruction.Intermsofoccupations,therewasanincreasefrom4%to11%inprocess,plant/machineoperatives,andfrom6%to11%in‘elementary’occupations.53
Meanwhile,RuhsandVargas-Silvanotethatanincreaseintheflowofmigrantstowardslowskilledjobsmayhelpexpandbusinessesandsectorswhichuselowskilledlabourintensively.54Someofthestatisticsontheconcentrationofmigrantsinspecificoccupationsandsectorsin2016areillustratedbelow.Theseappeartobeoccupationsandsectorswithhighdemandsforunskilledandsemi-skilledlabour,andthisaccordswithmostanalysisonthetypesofjobssecuredbyEUmigrantstotheUKlabourmarket.
Table1:OccupationsandSectorswithHighEUMigrant%inWorkforce,2016
Occupation Sector
ElementaryProcessPlantOccs 32 ManufactureofFoodProducts 31
ProcessOps 30 UndifferentiatedGoods 28
Elementary Storage Occs 23 DomesticPersonnel 24
Cleaning+HousekeepingManagers 22 Accommodation 19
ElementaryCleaningOccs 17 Warehousing+SupportforTransport 17
AssemblersandRoutineOps 16 ManufactureofWood+WoodProducts 14
MobileMachineDrivers+Ops 16 ManufactureofLeather+RelatedProds 13
Metalforming,welding+related 15 MiningofMetallicMinerals(Ores) 13
Plant+MachineOperatives 14 ServicestoBuildings+Landscape 13
ElementaryagriculturalOccs 14 WasteCollection,Treatment,Disposal 13
Source: Computed from Labour Force Survey 2016 dataset.
ThistypeofanalysisprovidessomedetailbothintermsofsectoralandoccupationareasatriskifthesupplyofEUmigrantsreduces,andhelpspinpointwherepotentialinterventionsmightberequired,suchassectorand/oroccupationallyspecificskillsinvestmentprogrammes.
51 Nickell,S.,andSaleheen,J.(2015).‘TheImpactofImmigrationonOccupationalWages:EvidenceforBritain’.BankofEnglandStaffWorkingPaper,No.574.
52 Wadsworth,J.,Dhingra,S.,Ottaviano,G.,andVanReenen,J.(2016).‘BrexitandtheImpactofImmigrationontheUK’.CEPBrexitAnalysisNo.5.
53 TheMigrationObservatory(2016).‘ProjectUnclear:Uncertainty,BrexitandMigration’.UniversityofOxford.
54 Ruhs,M.,andVargas-Silva,C.(2016).TheLabourMarketEffectsofImmigration.TheMigrationObservatory,UniversityofOxford
27BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
ARecruitmentChallenge?DependingonthespecificchangestoUKmigrationpolicypost-Brexit,therecruitmentchallengeforemployerscouldbemanageable,atleastintheshortterm.• AnnualinflowsofEUmigrantsseekingworkintheUKmaybeaslowasaround200,000iftheONS
estimatesareaccurate.• Theremaybeariskofhigherlevelsofreturnmigration.Recentstatisticssuggestthisisthedirectionof
travel,butthereisstillanexcessofEUimmigrantsrelativetoreturnmigration.• Itisdifficult,whateverthenatureoftheUK’sfuturerelationshipwiththeEU,toseetheUKgovernment
significantlycurtailingtheinflowofskilledEUmigrants,althoughtherearefearsthattherewillbeareductioninthenumbersofskilledEUmigrantswishingtocometo,orremainin,theUK.
• EveniftheUKgovernmentwere,forthesakeofargument,tohalveEUmigrantflowstocutbackonthenumbersgoingintolowskilledjobs,thereductionof,say,100,000peryearshouldnotconstituteaseriousshockintheshorttermtoaUKlabourmarketmadeupofaround30millionjobs.However,specificlocalities,sectorsandemployerscouldbehardhit.
Clearlyoverthemediumtolongerterm,iftherearesustainedreductionsininflowsfromtheEU,andhigherratesofreturnmigration,thelossestotheUKlaboursupplywillbecomemuchmoresignificant–butthereshouldbetimetoadjusttotheseinthewaysdescribedbelow.
SectorsandemployerswithaparticularlyhighlevelofdependenceonEUmigrantswillhaveanumberofoptionsintermsofhowtheyadaptifthereisincreasedreturnmigrationalongsideareducedinflowofnewEUmigrants.55 • Theymaytrytosubstitutetechnologyforlabour.• TheycanupskillandrecruitexistingUKworkerstofillvacanciesthatwouldotherwisehavebeenfilled
byEUmigrants.• Theycanincreasewagesandimproveconditions–withinlimitsinprice-competitiveproductmarkets–
toattractmoreUK-bornrecruits.• Theycanrelocatetoothereconomies–althoughthisisconstrainedforbusinessesengagedinmany
servicesectors.Inthesamevein,theycouldoutsourceprocesseswhichtheynowfinddifficulttodeliverdirectly.Publicsectoremployersdonothavetherelocationoption,andwouldfindthemselvesconstrainedintermsofoutsourcing.
Ofcourse,otheroutcomesformoreseverelyimpactedbusinessesaredownsizingorworse.Clarkenotesthat‘Firms in migrant-reliant sectors…..will need to fundamentally re-think their business models or risk closure.’ 56
Daviessuggeststhatsomeemployersfacingshortagesoflabourinlowskilledsectorsarenowacceptingthattheyhadbecome‘too blinkered in their recruitment strategies in the last decade’. 57Someoftheseemployersarenowexploringtherecruitmentpotentialfromgroupscurrentlylesswellrepresentedinthelabourmarket,suchasex-offenders.Theyarealsopreparingtoraisepaylevelsandskillsinvestmenttohelprecruitnewworkers,butmoreimportantlyprogressandretainexistingmembersoftheirworkforces.
55 Meager,N.(2016).‘UKEmploymentandBrexit:TheIssues’.IESViewpoint,Issue24.
56 Clarke,S.(2016).‘ABraveNewWorld:HowReducedMigrationCouldAffectEarnings,EmploymentandtheLabourMarket’.ResolutionFoundationBriefing.
57 Davies,G.(2017).‘Theunder-representedbenefitofBrexit?’CIPDVoice,Issue8.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES28
Implications for Fulfilling Work AvailabilityofWorkTherearesubstantialnumbersofpeopleintheUKwhopotentiallystandtobenefitfromanincreaseinhardtofillvacanciesresultingfromareducednumberofEUmigrantsintheworkforce.Forexample:• FortheperiodJunetoAugust2017,therewereover1.4millionunemployedpeople,usingtheLabour
ForceSurveydefinitionofactivelyseekingandavailabletotakeupwork.58Manyofthesewillsecureanunfilledvacancyrelativelyquickly,butthebalancewillgoontobecomelong-termunemployed.Inatighterlabourmarket,theproportiongoingontolong-termunemploymentwilltendtofall.
• Althoughthereissomeoverlapwiththeunemployedcount,inFebruary2017over3.8millionworkingagepeoplewereinreceiptofDWPoutofworkbenefitssuchasEmploymentandSupportAllowance(ESA).59Manyofthesearepeoplewithhealthanddisabilityissues,someofwhomwiththerightsupportpackagescouldfindandsustainwork.
• Whileagainnotingissueswithoverlappingcategoriesofworklesspeople,fortheperiodApriltoJune2017therewerenearly800,00018to24yearoldsnotineducation,employmentortraining(NEET),around1in10ofallintheagegroup.60
• Finally,asnotedearlier,therearegroupsofthepopulationwithemploymentratessignificantlybelowtheaverage.Theseincludedisabledpeopleandthosewithlowornoeducationalqualifications,whocouldbesupportedwithwell-resourcedandintelligentlydesignedemployabilityprogrammestosecureunfilledvacanciesinthelabourmarket.
GreggandGardinerarguethataround2millionpeoplefromgroupswithbelowaverageemploymentratescouldbeaddedtotheactiveUKworkforcewithreformstothecurrentapproachestoemploymentservicedesignanddelivery,tobringaboutgenuinefullemploymentby2020/21.61Thiswouldamounttoanannualadditionofaround400,000totheactiveworkforceovertheperiodto2021.ThiscouldcomfortablyexceedanyreductionsinEUmigrantsenteringtheUKlabourforce.
However,itisclearthatBrexitalsobringsthreatswithregardstotheavailabilityofemploymentintheUK.AlthoughtheacademicconsensusisthatEUmigrantshavenotimpactedontheearningsandemploymentprospectsofUKbornworkers,theseworkerswillbeemployedsidebysideinthekindsofsectorsandoccupationsshowninTable1.IfemployersstruggletoretainandrecruitsufficientworkersduetochangesinEUmigrationrules,someofthesejobsmaydisappear–throughtheoff-shoringofjobs,increaseduseoftechnology,orsimplyreductioninactivityoroutrightclosureforsomeemployers-withknock-onnegativeconsequencesforUKbornlabour.Thesejobsappeartobedisproportionatelyinlowskilledoccupationsandsectorsandsoareductioninthevolumeofthesejobs,ifitoccurs,willimpactmostonthosealreadydisadvantagedinrelationtoaccesstoemployment.
Itisimportanttonotethatthereisasignificantpolicyissuehere.TheUKhastoomanypoorqualityandlowpayingjobs,asmanifestedinthepolarisationoftheUKlabourmarketoverthelast25yearsorso.Sumptionposessomeinterestingpolicychoices.62
58 OfficeforNationalStatistics(2017e).TheUKLabourMarket:October2017.Availableonlineat:https://www.ons.gov.uk/employmentandlabourmarket/peoplein-work/employmentandemployeetypes/bulletins/uklabourmarket/october2017
59 DWP(2017).QuarterlyBenefitsSummary,August.
60 OfficeforNationalStatistics(2017f).YoungPeopleNotinEducation,EmploymentorTraining:August2017.Availableonlineat:https://www.ons.gov.uk/employ-mentandlabourmarket/peoplenotinwork/unemployment/bulletins/youngpeoplenotineducationemploymentortrainingneet/august2017
61 Gregg,P.,andGardiner,L.(2016).TheRoadtoFullEmployment.ResolutionFoundation.
62 Sumption,M.(2017).LabourImmigrationafterBrexit:Trade-offsandQuestionsaboutPolicyDesign.TheMigrationObservatory:UniversityofOxford.
29BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
ShouldtheUKgovernment:• Putabigeffortintosustainingcurrentlevelsoflowpayingemploymentin,say,areasofagriculture
andhorticultureheavilydependentonEUlabour,orsimplyseeshrinkagesinthesesectorswithimportsmakinggoodtheshortfall?
• Raisemorefundingforadultcareservicestoprovideabetterqualityservicedeliveredbybetterpaidworkers,asopposedtotheexistingservicelargelydependentonlowwagedlabourincreasinglydrawnfromabroad?
LevelsofPayMuchoftheevidencebasesuggeststhatEUmigrationhashadlimitedimpactsinthelabourmarketinrelationtotheexperiencesofUKbornmembersofthelabourforce.Theimplicationofanumberofthestudies–althoughoftennotclearlystated–isthatUKbornworkersoperatingatlowerskilllevelsareonaveragesimplynotascompetitiveasEUmigrantsintermsofproductivityandwagedemands.ThismeansthatEUmigrantsareoftennotsubstitutingdirectlyforUKbornworkers.
Nevertheless,inprinciple,thereducedflowofmigrantstolowskilledjobscouldleadtoimprovedwages63 andotherconditionsasemployerstrytocopewithrecruitmentproblems,particularlyinsectorsandlocalitieswithahighdependenceonEUmigrantlabourandoperatingintighterlabourmarketareas.However,asMeagerhasargued,employersmayhaveto:• Offerlongerhours,bettercontractsandbetterpay.• Investmoreinskills.64
Thereis,however,noconsensusviewonthisandotheranalystsarescepticalaboutthepotentialbeneficialeffectsonjobqualitythroughhigherearningsatthelowerendofthelabourmarket,basedonthehistoricalassessmentoftheimpactofimmigration.65
SkillDevelopmentTheexpectationisthattherewillbepushbackbytheUKgovernmentintheformofmeasurestoreduceEUmigrationgoingforward,anditislikelythatgreaterweightwillbegiventoreducingmigrationintolowskilledjobswhichwillbefilledmoreeasilybyUKbornworkers.Thefocusthenneedstobeforwardlooking,withanemphasisonraisingtheemployabilityandskillsofUKbornworkerssothattheywouldbeattractivetoemployersandprovetobeeffectiveemployeesinjobsinbusinessesandsectorswhichwillbeexposedastheEUmigrantlaboursupplyshrinks.
TheCharteredInstituteofPersonnelandDevelopment(CIPD)highlightdeclininginvestmentinvocationaltrainingbyUKemployerssince2005,comparedtoincreasedskillsinvestmentbykeyEuropeancompetitorssuchasFranceandGermany.FrenchemployersnowinvestinskillsnearlyfourtimesasmuchastheirUKequivalents,andGermanemployersmorethantwiceasmuch.WenotedearlierreportsthatsomeCIPDmembersacceptedthattheyhadbeentoocomplacentintheirrecruitmentstrategiesoverthelastdecadeduetoplentifulsuppliesofmigrantlabourandwerenowurgentlyre-thinkingtheirposition,
63 Bell,T.andClarke,S.(2017).‘EndofanEra.’InClarke,S.(ed).WorkinBrexitBritain:reshapingthenation’slabourmarket.ResolutionFoundation;Bell,B.,andMachin,S.(2016).‘BrexitandWageInequality’.InBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.CentreforEconomicPolicyResearch;Petrongolo,B.(2016b).‘BrexitandtheUKLabourmarket.’CentrePiece,Autumn;Portes,J.(2016)‘Immigration–theWayForward’inBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.CentreforEconomicPolicyResearch.
64 Meager,N.(2016).‘UKEmploymentandBrexit:TheIssues’.IESViewpoint,Issue24.
65 Clarke,S.(2016).‘ABraveNewWorld:HowReducedMigrationCouldAffectEarnings,EmploymentandtheLabourMarket’.ResolutionFoundationBriefing;Petrongolo,B.(2016a).‘BrexitandtheUKLabourMarket’inBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.Centrefor EconomicPolicyResearch.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES30
particularlyinrelationtolowerskilledvacancies.Increasinginvestmentinskillsandinpaylevelswerenowbeingactivelyconsidered.
Ofcourse,employerswillalsobelikelytoconsidertheoptiontointroducemoreautomatedprocessestoreducetheneedforlowerskilledlabour.Thisraisesinterestingissuesaboutthereturnstoemployersoninvestingincapital,relativetothepotentialneedforrelativelymodestinvestmentinupskillingforjobsthatrequirequitelimitedskilllevels.Meagerisconcernedthatinvestmentinlowleveltechnologiestoreplaceunskilledlabourwillsimplycontributetothelowskills/lowproductivityequilibriumalreadyentrenchedinsomeUKregionsandsub-regions.66
JobQualityItwasarguedearlierthatwhenlabourmarketstightendueto,say,robusteconomicgrowth,jobqualitytendstoimprove–andviceversainarecession.Ifsomeofthecommentaryaboveiswellfounded,reducedlaboursupplymighthavesimilareffects.
Forexample,ifthelowerendofthelabourmarkettightens,employersmayneedtobemoremindfulofemployeemoraleandwellbeingiftheyaretoattractandretainthem.Thismayencouragethemtoconsultmorewiththeiremployeesandtotrytounderstandfactorswithintheircontrolasemployersthatareimpactingonthejobsatisfactionoftheiremployees.
Issue 3: Changes in Employment Protection Laws and Regulations
OverviewandAnalysisTherearearangeofEUregulationswhichimpactonaspectsoffulfillingworkintheUK.Theseincluderegulationsaroundemploymentprotection,healthatwork,workinghours,anddiscriminationintheworkplace.
Pre-EUentry,theUKhaditsownlegislativeframeworkwhichimpactedonfulfillingworkinanumberofways–forexample,thelongtraditionofhealthandsafetyregulation,drivenbycampaigningbythetradeunionmovement.ItwasnotedearlierthattheUKhasgoodoutcomesinrelationtoworkplacehealthandsafetybyOECDstandards.Klossnotesthatemployerlegalobligationsinrelationtothehealth,safetyandwelfareofemployeeswereembeddedbeforeUK’sentrytotheEU,andthattheUK’sHealth&SafetyatWorkAct1974hasbeencopiedinanumberofcountries.67
However,KlossalsoarguesthattheEUaddedsignificantlytothebatteryofprotectionsforhealthandsafetyintheworkplace,particularlyinrelationtoriskassessment,controlofhazards,themonitoringofcontrols,andinformationandtraining.Intermsofthebroadspectrumofemploymentprotectionmeasures,mostanalystsandcommentators68arguethatemploymentrightsforUKworkershaveimprovedsignificantlyoverthelongtermduetoawiderangeofEUtreatyprovisionsanddirectives.Theimprovementsrelateparticularlyto‘atypical’workers(whoseemploymentrelationshipslieoutsidethe‘norm’offull-time,regularand‘permanent’employmentwithasingleemployer),rightsandprotectionsforwomenandotherdiscriminatedagainstgroupsandtherighttopaidholidays.Asaresultofthe
66 Meager,N.(2016).‘UKEmploymentandBrexit:TheIssues’.IESViewpoint,Issue24.
67 Kloss,D.(2016).‘Brexit–WhatNextforOHLaw?’OccupationalHealthatWork.13(2).
68 Kloss,D.(2016).‘Brexit–WhatNextforOHLaw?’OccupationalHealthatWork.13(2);ScottishUniversitiesLegalNetworkinEurope(2016).EmploymentLaw;Suff,R.(2016).‘WhatWillBrexitMeanforUKEmploymentLaw?’CIPDPublicPolicyblog.
31BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
WorkingTimeDirective,forexample,importantgainshavebeenmadeforquitesubstantialnumbersofUKemployeeswhodidnotformerlyenjoypaidholidays.Thisisclearlyanimportantbenefitintermsofenhancedjobquality.
Apointtoconsideristhattheseprotectionsareessentiallymitigatinganumberoftheundesirableconsequencesof‘atypical’employment,asopposedtocontrollingtheirgrowth.Asnotedearlierinthisreport,theUKhasseenasubstantialgrowthinzerohourscontracts,andtheseaveragedaround900,000in2016.Thereisalsoaperceptionofgrowthinsomeformsofso-called‘bogusself-employment’,butthereisnoreliablestatisticalevidenceontheextentofthisphenomenon.Additionally,asnotedearlier,thisformofself-employmentisnotrestrictedtothelowerregionsofthelabourmarket.
Itisalsoimportanttonotethatinternationalanalysisplacesastrongweightontheroleoflabourmarketinstitutionsinmitigatingtheforcesdrivingpolarisationoflabourmarketsandreductionsinjobquality.Thisisparticularlyimportantforworkersinthelowerpayendofthelabourmarket.TheUKiscurrentlycharacterisedbyrelativelyweaklabourmarketinstitutionsbyinternationalstandards,whichisexploredinmoredetailinSection4.
Inaddition,someoftheearlypost-referendumrhetoricfromtheUKgovernmentaboutmakingtheUKmorecompetitiveintermsofcorporatetaxationhasraisedfearsthatthismightextendtoreducingawiderangeofotherconstraintsoncorporatebehaviour–suchasemploymentprotectionlegislation.
Implications for Fulfilling Work
LikelihoodofChangeThecurrentpositionoftheUKGovernmentistoconsolidateexistingEUregulationsinUKlawbymeansofTheEuropeanUnion(Withdrawal)Bill.EUdirectivesarealreadybuiltintoUKlawthroughprimarylegislation,andconsequentlychangescanonlybemadeafterfullparliamentaryscrutiny.
Foravarietyofreasons,thethreatofanimmediateweakeningofUKemploymentprotectionsfollowingtheUK’sexitfromtheEUmaybelimitedduetothefollowing:• TherecanbenochangesuntiltheUKformallyleavestheEU.• Asnotedabove,muchoftheemploymentprotectionlawwhichhascomedownfromtheEUisalready
embodiedinUKprimarylegislation,andaroundthissitsasubstantialbodyofcaselawhandeddownbytheUKcourts,interpretingEUdirectivesandEuropeanCourtofJusticerulings.69BothParliamentandtheUKcourtswillbecentrallyinvolvedinanyattemptstoweakenthelegalbasisfortheseprotections.
• TheremainingbodyofEUemploymentprotectionregulationsandlawswillbetranslatedintoUKlawthroughTheEuropeanUnion(Withdrawal)Bill.AlthoughthereisgreatdisquietaboutthepotentiallylimitedroleofParliamentindebatingandscrutinisingchangestothisbodyoflegislation,thescaleandcomplexityofthetaskofreviewingandbringingforwardschangesdictatesaverylengthytimescalefortheprocess.70
InthemediumtolongertermanyUKgovernmentwishingtoreduceemploymentprotectionfacesamassiveandcomplextask,andmaybecomeembroiledinmanycourtcases.Italsohastobalancetheuncertaineconomicbenefitsofreducedemploymentprotectionagainsttheneedtostriketradedeals
69 Suff,R.(2016).‘WhatWillBrexitMeanforUKEmploymentLaw?’CIPDPublicPolicyblog
70 ibid
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES32
withothercountriesandgroupingofcountries–principallytheEU–wherethemaintenanceofhighlevelsofemploymentprotectionwill,formost,beanessentialrequirement.ThismayinpartexplainwhythePrimeMinisterhaspromisedthatexistingprotectionsforworkerswillbeguaranteedwhilesheremainsinpost.
WhatRightsCouldbeatRisk?Despitetheselimitingfactors,concernremainsthatmanyoftheexistingprinciplesgoingintoTheEuropeanUnion(Withdrawal)Billcouldinduecoursebeabandonedorweakened,essentiallyatthediscretionoftheExecutive.Underlyingthisconcernisarecognitionthatanyreductioninemploymentprotectionlawsandregulationswouldrepresentaweakeningofthesuiteofinstitutionalcontrolsofthelabourmarket,whichhavebeenshownininternationalstudiestobenefitthosetrappedinthelowerreachesofthelabourmarket.ConcernsalsoarisefromtheoppositionofpreviousUKgovernmentstopositivedevelopmentsaroundemploymentrights–suchastheWorkingTimeDirective.
TheTUCisdeeplyconcernedaboutthepotentialdamagetowhatarenowestablishedworkers’rights.Legalopiniontheysoughtidentifiedthefollowingkeyrightswherethereispotentialvulnerability:• Collectiveconsultation,includingtherightforworkers’representativestobeconsultedwheremajor
plannedchangescanimpactonpeople’sjobsorresultinredundancies.• Workingtimerules,includinglimitsonworkinghoursandminimumentitlementsontheamountofpaid
holidays.• EU-derivedhealthandsafetyregulations.• TransferofUndertakings(TUPE),whichoffersprotectionstothetermsandconditionsofworkerswhere
anorganisationorserviceistransferredoroutsourcedtoanewemployer.• Protectionsforagencyworkersandother‘atypical’workers,suchaspart-timeworkers.Suffalsoraises
concernsinrelationtothesegroupsofworkers,astheEUhastakenastrongleadinimprovingtheirprotection.71
• Compensationlevelsfordiscrimination,includingequalpayawardsandagediscrimination.72
Asnotedearlier,theevidenceisthattheEUhassignificantlyimprovedprotectionsaroundhealthandsafetyatwork,althoughtheUKhasastronghistoricaltrackrecordinlegislatingforthis.TherearecurrentthreatsintheUK,however,withthepublicsectorcontributiontothebudgetoftheHealthandSafetyExecutivefallingfrom£231millionin2009/10to£123millionin2019/20.73
Alsointermsofagencyworkerprotections,theEUintroducedimportantregulationsabouttheiraccesstokey‘collectivefacilities’suchastrainingandchildcare.ThesewereresistedbytheUKgovernmentandwereunpopularwithemployers,andcouldbevulnerablewhenthegovernmentcomestoreviewtheposition.74
Amorepositivenoteisstruckinsomeothercommentaries,particularlyfromindustrybodies:• Inasituationofgreatuncertainty,businessesandbusinessorganisationsarelookingforstabilityin
termsofemploymentprotectionlawsandregulations(forexampleCBI).75Thispositionwasre-statedin
71 Suff,R.(2016).‘WhatWillBrexitMeanforUKEmploymentLaw?’CIPDPublicPolicyblog.
72 Ford,M.(2016).Workers’rightsfromEurope:theimpactofBrexit.TradesUnionCongress
73 Warburton,C.(2016).‘HSEBusinessPlanRevealsFurtherBudgetCuts.Health+SafetyatWork,April.Availableonlineat:https://www.healthandsafetyatwork.com/hse/business-plan-reveals-further-budget-cuts
74 Ford,M.(2016).Workers’rightsfromEurope:theimpactofBrexit.TradesUnionCongress
75 CBI(2016).MakingaSuccessofBrexit.
33BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
consultationscarriedoutinthepreparationofthisreportwiththeCBI,FederationofSmallBusinessesandBritishChambersofCommerce.
• CIPDnotethatonly13%ofSMEssurveyedreportemploymentprotectionlegislationasabarriertotheircompetitiveness.76
FutureImprovementstoEmploymentProtectionAnadditionalconcernabouttheimpactofBrexitonemploymentlegislationisthatfutureimprovementsinemploymentprotectionemanatingfromtheEUmaynotbeappliedintheUKpost-Brexit.However,asignificantconstraintontheUKgovernment’sabilitytoreduce,orindeedfailtoimprove,employmentprotectionsistheneedtosignuptothecreationandmaintenanceof‘levelplayingfields’inthenegotiationofagreementsonthetradeingoodsandservices.Tradeagreementsincreasinglyhaveafocusonminimising‘socialdumping’inadditiontothetraditionaldumpingofproductsatartificiallylowprices.TheInternationalLabourOffice(ILO)notesthatsocialandlabourprovisionsfeatureinbilateraltradeagreements,particularlywhereCanada,theEUandtheUnitedStatesarepartiestotheagreements.77Morespecifically,theEU’schiefBrexitnegotiator,MichelBarnier,hassaidtheEUwillrefusetosignatradedealwiththeUKwhichinvolves‘unfaircompetition’duetoreductionsinenvironmentalandsocialprotections,includingworkers’rights.78
AvailabilityofWorkDuringtheEUReferendumcampaign,theUKGovernmentEmploymentMinisterarguedthatscrappingEUemploymentregulationswouldboosttheeconomyandcreate60,000newjobs.
Itishardtofindtheevidentialunderpinningthatwouldpredictsuchasignificantincreaseinemploymentthroughaprocessofderegulation.Inanyevent,itappearsthatinrelationtoemploymentprotectionlegislation,andalsoproductmarketregulation,thattheUKalreadyhasthemost‘competitionfriendly’regulatoryregimeacrosstheOECD.79CraftsalsoarguesthatthepotentialareasforderegulationwouldnotimpactsignificantlyontheproductivityperformanceoftheUKandsubsequentlyonGDPpercapita.80
Separately,EUregulationshavebeenparticularlyimportantinextendingsignificantlythepotentialfortacklingdiscriminationintheworkplaceregardingfundamentalissuessuchasequalpayforequalvalueofwork.TheseregulationshaveasignificantimpactonlargenumbersofworkersintheUKandareparticularlyimportantforthosegroupsofworkersatriskofthegreatestdiscriminationinaccessingemployment.
ProcurementandFulfillingWorkFromanopportunitiesperspective,theremaybesomescopeforleverageinrelationtolegalframeworksoutsideofemploymentprotection,wheretheUK’sexitfromtheEUmaysupportpositiveprogressonfulfillingwork.Procurementisagoodexamplehere.
76 CIPD(2015).EmploymentRegulationandtheLabourMarket.
77 ILO(2017).‘FreeTradeAgreementsandLabourRights’.Availablefrom:http://www.ilo.org/global/standards/information-resources-and-publications/free-trade-agreements-and-labour-rights/lang--en/index.htm
78 TheIndependent(2017).‘Brexit:EUwon’tsigntradedealifUKstartsderegulationracetothebottom,Brusselswarns’.TheIndependent,20thJuly.Availableonlineat:http://www.independent.co.uk/news/uk/politics/brexit-eu-trade-deal-workers-rights-tax-haven-michel-barnier-environmental-legislation-a7851761.html
79 Barnes,S.,Bouis,R.,Briard,P.,Dougherty,S.andEris,M.(2013).‘TheGDPImpactofReform:ASimpleSimulationFramework’.OECDEconomicsDepartmentWorkingPaper,No.834.
80 Crafts,N.(2016).‘Brexit:LessonsfromHistory’.InBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.CentreforEconomicPolicyResearch.
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• EUprocurementdirectivesandregulationsareheavilybasedonensuringanopenmarketacrosstheEU,reducingthescopeformemberstategovernmentsandotherauthoritiestofavourdomesticcontractors.
• Thereisastrongtradition,mostpronouncedinScotland,intryingtodevelopthecontributionofprocurementtotacklingsignificantpolicyobjectivesinareassuchasemployabilityandinequality.BigstepshavebeenmadeinScotlandinrelationtodevelopingtheconceptofandlegislatingforCommunityBenefitinProcurement,andtherehavealreadybeenevaluationsoftheeffectivenessofimplementation.81However,thislegislationhadtobeextremelycarefullydraftedsoasnottofallfoulofEUprocurementstrictures.
• Conceivably,procurementcouldbeusedmoreproactivelyacrosstheUK,postBrexit,tofavourcontractorswhoprovidefulfillingworkopportunities,sohelpingdriveimprovementsinfulfillingworkfromthedemandside.However,akeyconstraintwouldbethe‘levelplayingfield’restrictionswhichwillneedtobeacceptedtosealforeigntradeagreements.
Issue 4: Impacts on European Structural Funds
OverviewandAnalysisTheEUStructuralandInvestmentFundsaremainlycomprisedoftheEuropeanRegionalDevelopmentFund(ERDF)andtheEuropeanSocialFund(ESF),accountingfor,intheUK,around78%ofthetotalfundsreceived.Thenextlargestcomponentataround20%istheEuropeanAgriculturalFundforRuralDevelopment(EAFRD).ThevalueofthestructuralfundscomingtotheUKhasfallenquitesubstantially,particularlywiththeaccessionofanumberofEasternEuropeanmemberstates.Forthe2014-2020programmingperiod,thetotalvalueofthefundsprovidedbytheEUis£13.9billion,withUKmatchfundingof£9.2billion.
ERDFisfocussedprimarilyoninnovationandresearchandsupportforSMEs,butwithprioritiesalsoaroundthedigitalagendaandlowcarboneconomy.Clearly,supportforSMEscouldbeextremelyimportantintermsofrespondingtosignificantchangeswithinkeysectorsinthefaceofuncertaintyandchangesaroundtradingarrangements.
TheESFisfocussedmoreonemploymentandlabourmarketissues.Formanyyearsithasunderpinnedthedeliveryofemploymentservices,particularlythosetargetingpeoplefurtherfromthelabourmarket,andthoseinthemoreeconomicallydepressedregionsoftheUK.Muchoftheservicedeliverycomesthroughthirdsectororganisationswhichtendtobemoreexpertinenhancingaccesstoworkformoredisadvantagedgroupsinthepopulation.TheESFallocationfortheUKforthe2014-2020programmingperiodis£8.7billion,but£4.0billionofthisisco-fundedbyUKgovernments,agenciesandotherrelevantauthorities.82
TheUKgovernmenthasundertakentocompensateforanyshortfallinEUfundingbetweenthepointofleavingtheEUand2020.83Thisgivestimeforadjustmentstobemadeandfornewapproachestobedrawnup.However,organisationsinthevoluntarysectorhavevoicedtheirconcernsaboutthepotential
81 Sutherland,V.,Glass,A.,McTier,A.andMcGregor,A.(2015).Analysisoftheimpactandvalueofcommunitybenefitclausesinprocurement.ScottishGovern-ment.
82 EuropeanCommission(2017).ESFBudgetbyCountry:2014-2020.Availablefrom:http://ec.europa.eu/esf/main.jsp?catId=443&langId=en
83 Gov.UK(2017).‘ChancellorPhilipHammondGuaranteesEUFundingBeyondDateUKLeavesEU’.Availablefrom:https://www.gov.uk/government/news/chan-cellor-philip-hammond-guarantees-eu-funding-beyond-date-uk-leaves-the-eu
35BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
lossfrom2020ofthemonieswhichhaveflowedtothemthroughESFinparticular.84Nevertheless,asalmosthalfofthemoneygoingintoESFisfundingprovidedbyUKbodiesasopposedtoEU,thereiseveryopportunitytomakeacaseforthecontinuationofthisfundingforsomesimilartypeofprogramme.ItisessentiallywithinthegiftoftheUKgovernment.
Implications for Fulfilling Work
AvailabilityofWorkThethreatsarisingfromthelossofEuropeanStructuralFundsfallprimarilyintheareaofavailabilityofwork,andmorepreciselyaccesstowork,forthemoredisadvantagedgroupswhichhavetraditionallybeensupportedbyspecialistemployabilityservicesfundedthroughESF.Thesehavesometimesbeenstandalone,andoftenquiteinnovative,approachestohelpingthosefurtherfromthelabourmarketbackintowork.
Additionally,ESFhasbeenusedtoalignwith,andaddvalueto,moremainstreamemploymentprogrammesrunbytheUKgovernment,anddevolvedgovernmentsinotherpartsoftheUK.
TheclosureofESFwouldhavetwosignificantimpacts:• TheemployabilityserviceavailabletothemoredisadvantagedjobseekersacrosstheUKwouldbe
muchdiminished.ThisisinacontextwheretheUKgovernment’snewWorkandHealthprogramme(whichappliesonlytoEnglandandWales)isgoingtobeassociatedwithasignificantreductioninspecialistemploymentsupportforjobseekerswithhealthanddisabilityissues.In2017,supportwillbeavailableforonly160,000clientscomparedto300,000in2013/14.85
• Manyoftheorganisationsdeliveringtheseservicessitinthethirdsector,andmanyofthesearedeliveringemployabilityservicesalongsidearangeofothersupportservicesforsomeoftheUK’smostdisadvantagedgroupsandcommunities.ThelossofESFmoniesmaysignificantlydepletethecapacityoftheseorganisationstodeliverservicesinasustainableway.
However,evaluationsofESFandStructuralFundsmoregenerallydonotsuggestthatthefundinghasmadeasignificantimpact.BellconcludesthatthereislimitedempiricalsupportfortheideathattheStructuralFundshaveimpactedpositivelyonregionaleconomicactivity,forexample.86Additionally,someoftheevaluationevidencehighlightsfeedbackfromdeliveryorganisationsinreceiptoffundingwhichsuggeststheESFishighlybureaucraticandoneroustoadminister.87Finally,thereareconcernsthatthemethodsforassessingtheeffectivenessandvalueformoneyofESFarenotsufficientlyrobust.88
OpportunitiesforImprovementIftheUKgovernment–aswellasdevolvedadministrations–canbepersuadedtomaintainafundsuchasESF,makinggoodthelossoftheEUcontribution,thereispotentialtousethismoneymuchmorecosteffectivelythanwaspossibleunderthemanagementbytheEuropeanCommission.• AsERSApointout,itiscriticallyimportantfortheUKtoensurethatthefundingavailabletotheUK
84 NCVO(2016).‘FourMonthson–PotentialImplicationsofBrexitfortheVoluntarySector’.NCVOBlog.
85 ERSA(2016).‘WorkandHealthtopoftheagenda?Butwhere’sthecash?’ERSABlog
86 Bell,D.(2017).RegionalaidpoliciesafterBrexit.OxfordReviewofEconomicPolicy.33(S1).
87 HouseofLords(2010).MakingitWork:TheEuropeanSocialFund.EuropeanUnionCommittee;ERSA(2017).EvidenceonBrexitandtheLabourMarket.HouseofCommonsWorkandPensionsCommittee.
88 McGregor,A.,andSutherland,V.(2012).FinalSynthesisReportonAccesstoEmployment.ESFExpertEvaluationNetwork.EuropeanCommission,Brussels.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES36
throughESFforthe2014-2020programmingperiodisfullyallocatedtospecificemploymentservicedeliverypriortoleavingtheEU.89
• ThereisabigopportunitytoachieveamuchmoreeffectiveuseofthefundsthaniscurrentlythecasewithESF.Significantchangescouldbemadetoreducetheveryheavyburdenofadministrationandauditingrequirements.Theseproveextremelyonerousfor,inparticular,smallerthirdsectororganisations,anditisthesetypesoforganisationwhichareparticularlyadeptathelpingmoredisadvantagedgroupsandpeoplefrommoredisadvantagedcommunitiesintowork.90
• Thereisalsoscopetobringaboutamuchbetterintegrationofemployabilityandemployability-relatedservices(suchashealthservices),aswellastopooldifferentsourcesoffunding,toprovideamuchmoreeffectiveserviceandgreatervalueformoneyforhardertohelpindividualsandgroupsinthelabourmarket.Thisisalreadybeginningtohappendrivenbythedevolutionofmanyrelevantpowerstocityregionsandotherregionalpartnerships.91
89 ERSA(2017).EvidenceonBrexitandtheLabourMarket.HouseofCommonsWorkandPensionsCommittee.
90 ERSA(2016).WorkandHealthtopoftheagenda?Butwhere’sthecash?ERSABlog;ERSA(2017).EvidenceonBrexitandtheLabourMarket.HouseofCommonsWorkandPensionsCommittee;McHugh,K.(2017).IfBrexitmeansBrexit,whatdoesitmeanforthelabourmarket?ERSABlog.
91 Waite,D.,McGregor,A.andMcNulty,D.(2017).InclusiveGrowthandCityDealsBriefing.JosephRowntreeFoundation.
37BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
5. Mitigating threats and exploiting opportunties
Thediscussioninthisfinalsectionofthereportisconductedundertwoheadings:• ActionsthatcouldbetakentopromotefulfillingworkirrespectiveofwhetherBrexitgoesaheadand
independentlyofthetypeofBrexit,forexample‘hard’versus‘soft’.• ActionswhichcanbetakeninresponsetospecificthreatsoropportunitiesasaresultofBrexit.
General Actions to Promote Fulfilling Work Thereisanextensiveliteratureinthebroadareaofjobquality,andsomeofthemajorexpertsinthefieldhavebroughtforwardproposalsforimprovingtheUK’sposition.92Itisbeyondthescopeofthisreporttodescribeandassessthese.ThekeypointisthatthemanypotentialriskstofulfillingworkarisingfromBrexitsetoutinearliersectionsofthisreportincreasetheurgencyforaction.Anysystematicplanofactiontopromotefulfillingworkmustaddressboththedemandandsupplysideofthelabourmarket.
ActionsontheDemandSideoftheLabourMarketAprominentfeatureoftheUKlabourmarketoverthelastdecadehasbeentheriseofinsecureworkingconditions,includingzerohourscontractsand‘bogusself-employment’.
TheTaylorReviewmadeawiderangeofrecommendationsonhowbesttorespondtothegrowthofpoorwork.Themoreimportantrecommendationscalledfor:• Clarificationofthelegaldefinitionsof‘employee’,‘worker’and‘self-employed.’• Greaterequalityoftreatmentbetweentheemployedandtheself-employedintermsoftaxtreatment,
butalsoaccesstostate-basedentitlements.• Holidayandsickpaytobeavailabletoalllowpaidworkersinthe‘gigeconomy.’• Equalpayforagencyworkers.• Thecreationofanationalstrategytomakegoodworkavailabletoall.93
TheTUCfeltthattheTaylorReview’srecommendationswereinsufficientlyradicalinthelightofthesignificantgrowthovertimeinpoorwork,andthemanycostsassociatedwiththis.94
Moregenerally,governmentanditsagenciesneedtodeveloparobustandstrategicresponsetothoseemployerspursuingabusinessmodelwhichentailsrelativelylowskilledandpoorlyrewardedwork,coupledwithotherunacceptablypoorworkingconditions,sometimeswithastrongdependencyonmigrantlabourtosustainit.Manyofthesebusinessesarepotentiallybeingunintentionallysupportedintermsofthesupplyoflabourtopoorqualityjobsthroughgovernmentwelfareprogrammessuchastaxcredits95 and ‘workfirst’employmentprogrammesbackedupbyincreasedconditionalityandsanctionsaroundwelfare
92 Felstead,A.,Gallie,D.,andGreen,F.(2015).‘PoliciesforIntrinsicJobQuality’,inFelstead,A.,Gallie,D.andGreen,F.(eds).UnequalBritainatWork.Oxford:OxfordUniversityPress;Sisson,K.(2016).‘Shapingtheworldofwork–timeforaUKjobsstrategy’.WarwickPapersinIndustrialRelations,No.105;Findlay,P.,Warhurst,C.,Keep,E.andLloyd,C.(2017).‘OpportunityKnocks?ThePossibilitiesandLeversforimprovingJobQuality’.WorkandOccupations.44(1).
93 TaylorReview(2017).GoodWork.TheTaylorReviewofModernWorkingPractices.
94 TUC(2017b).TUCCommentonTaylorReview.Availableonlineat:https://www.tuc.org.uk/news/tuc-comment-taylor-review
95 CitizensUK(2015).PublicSubsidiestoLowWageEmployers:MethodsBriefing;Neumark,D.(2015).‘ReducingPovertyviaMinimumWages,Alternatives’.Fed-eralReserveBankofSanFranciscoEconomicLetter,December;Schmitt,J.(2012).LowWageLessons.CentreforEconomicandPolicyResearch.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES38
benefits.96Thegovernmentandotherpublicsectororganisationsshouldconsiderhowtheymightsecure greaterleveragefromtheirpurchasingpowerinrelationtobothgoodsandservicestorequirealltheirsupplierstosupportfulfillingworkinitsvariousdimensionswithintheirworkplaces.Asnotedearlierinthereport,theremaybegreaterscopepost-Brexittoadoptanapproachtopublicsectorprocurementwhichismoreproactiveinpursuitofinclusivegrowthobjectives.
However,theironyisthatinsomesectors–suchasadultcare–itisthelowlevelofpublicfundingthatconstrainstheabilityforemployerstoofferfulfillingworkacrossitsmanyfacets.Againinthecaseofsocialcare,theconsequencesoflowpayandpoorconditionsforstaffrecruitmentandretentionultimatelyimpactuponthequalityofcareprovidedtoservicerecipients.97Moregenerally,oneofthemajorweaknessesintheliteratureonjobqualityisthelimitedanalysisoftheroleofconsumers(households,businessesandpublicsectororganisations)who,throughanincreaseddemandfor‘cheap’over‘good’inrelationtoproductsandservices,exertasignificantimpactonthenatureoflabourdemand.Sincetheonsetofthe2008recessionthesecostpressureshavebeenintensifiedformanypurchasersofgoodsandservices–inparticularhardpressedconsumersexperiencingsignificantreductionsinrealearningsandstatebenefits,andawiderangeofpublicbodieshavingtorespondtosignificantcutsinfunding.98
Theneedforgovernmentactionisreinforcedbythedeclineinthemembership,collectivebargainingcoverage,powerandinfluenceofthetradeunionsintheUK,whichhistoricallysignificantlyimprovedandeffectivelyprotectedthequalityofworkandconditionsattheworkplace.TradeunionsstillcarryoutthisfunctionveryeffectivelyinsomeotherEUmemberstates,particularlyintheNordiceconomieswheretradeunioncoverageremainshigh.
Bringing About Step Change in the UK Supply Side InfrastructureCraftsarguesthattheUK’smaineconomicpolicyproblemsaremoretodowiththepolicyshortcomingsofsuccessiveUKgovernmentsthananyimpactofEUmembership.Hehighlightsinparticularseriousproblemswitheducation,infrastructure,innovationandthetaxsystem–allofwhichactasadragonproductivitygrowth,whichinturninhibitsthegrowthinearnings.99
FocussingspecificallyoneducationandskillsasareasofpublicpolicywhichcanimpactsignificantlyontheUKpost-Brexit,effectiveactionisnowrequiredtoimprovebasiceducationandeducationaloutcomes,reducingtheUK’sunacceptablylongtailofpeoplewithnoorloweducationalqualifications.In2016,therewerenearly3.4millionworkingagepeoplewithnoqualificationsandafurther4.5millionwithaqualificationnohigherthanNVQLevel1.Employmentratesforthosewithnoorlowqualificationsareonly63%,comparedto80%withthosewith‘uppersecondary’qualificationsand86%ofthosewith‘tertiary’qualifications.100
Itisessentialtoreducethesupplyofpeoplewhoseonlyormainoptionsareworkinthelowesttiersofthelabourmarket,andwhofacelittleprospectofprogressiononcelockedintothe‘secondary’labourmarket.Atthesametime,actionisrequiredtotackletheproblemofskillsunderutilisation,sittingside
96 Etherington,D.andDaguere,A.(2015).WelfareReform,WorkFirstPoliciesandBenefitConditionality:ReinforcingPovertyandSocialExclusion?CentreforEnterpriseandEconomicDevelopmentResearch,MiddlesexUniversity;Watts,B.,Fitzpatrick,S.,Bramley,G.andWatkins,D.(2014).WelfareSanctionsandConditionalityintheUK.JosephRowntreeFoundation
97 HouseofCommons(2017).AdultSocialCare.CommunitiesandLocalGovernmentCommittee.
98 Gould,C.(2010).Cyclesofpoverty,unemploymentandlowpay.JosephRowntreeFoundation.
99 Crafts,N.(2016).‘Brexit:LessonsfromHistory’.InBaldwin,R.(ed).BrexitBeckons:ThinkingAheadbyLeadingEconomists.CentreforEconomicPolicyResearch.
100NOMIS(2017).DataextractfromAnnualPopulationSurvey,2016.
39BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
bysidewithpersistentskillshortagesinareassuchasdigital.Thisnecessitatesanoverarchingreviewofthesocio-economicrateofreturntopublicinvestmentindifferentsegmentsoftheeducationandskillsinfrastructure,includingwork-basedlearningsuchasapprenticeships,toensureweareinvestingwisely.Atthesametime,byusingthepublicsector’sleverageonprivatebusinessesthroughprocurement,privatesectorinvestmentinskillingandupskillingtheirworkforcescouldbeincentivised.
Inassociationwithactiononthedemandsideofthelabourmarket,effectivesupply-sidereformmakesitmorelikelythattheUKpost-Brexitcancompeteeffectivelyintheglobaleconomy.Thiswouldhelptocreatealabourmarketthatissufficientlybuoyanttosustainanenvironmentwhereprovidingfulfillingworkisarequirement,ifemployersaretobeabletorecruitandretainthevolumeandqualityofemployeestheyneedtomaketheirproductsanddelivertheirservicesinanefficientandcompetitivemanner.
Specific Actions Required in Response to Brexit
Inthissection,weconsiderrequiredactionsmorespecifictothethreatsandopportunitiesassociatedwithBrexitdiscussedearlierinthereport.
Issue1:DecliningEmploymentLevelsinaSlackerLabourMarket
Intheshortterm,itisclearthatamajorriskstemmingfromBrexitcouldbeasignificantreductioninexporting,andinforeignanddomesticinvestment,whichinturnwoulddenttheUK’sgrowthrateandpotentiallyleadtorisingunemployment.TherearealsopotentialchallengesiftariffsareplacedonimportsfromtheEU.TheimpactswillvaryacrosssectorsinlinewiththeirdependenceonEUimports.
However,employmentandinvestmentincarmanufacturingwouldbeseriouslyatriskduetoahighdependencyontheimportingofpartsandcomplexsupplychainsforpartscrossingthebordersofmanyEUcountries.Thisisalsoanindustrywhichoffersgoodearningsandconditionsinthatmiddlepartoftheemploymentstructurewhichhasbeenhollowedoutovertime.Itisclearthatthesepossibletradedevelopmentscouldimpactnegativelyandsignificantlyonfulfillingwork.ThequalityofjobshasbeenadverselyeffectedbyUKrecessions,andthishasbeenwelldocumentedsincethecollapseofUKmanufacturinginthe1980s.Therearenoone-offmeasuresorspecificinterventionstodealwiththis.ItwillallbedowntotheskillwithwhichtheUKeconomyismanagedatthemacrolevel.
Issue2:DecliningEUMigrationtoUK
ItwasarguedearlierthatdecliningEUmigrationintolowerskilledjobsposesthreatsforbusinessinsomespecificsub-sectors,butalsoopensupopportunitiestopromotefulfillingwork.Inordertotakeonthethreatsandexploittheopportunitiesanumberofpotentialmitigatingactionscouldbeundertaken.
DevelopBrexit-DrivenTargetedEmployabilityandSkillsInterventionsEarlierinthereport,someanalysiswaspresentedonsectorsandoccupationswhichfeaturehighlevelsofdependenceonEUmigrantworkers.Analysinggeographicalvariationswouldhelptoidentifyfurtherareasofemployeerecruitmentandretentionpressurelikelytoemergepost-Brexit.WhentheUKgovernmentisinapositiontoputintoeffectanewpolicyonEUmigration,thiskindofoccupational,sectoralorregionalanalysiscanbeeasilyandquicklydeployedtolocatetheBrexit-inducedpinchpointsfromtheperspective
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES40
ofemployers,butalsotheopportunitiestopreparecurrentlyunemployedorunderemployedUKbasedworkersforthevacanciescreated.Additionally,someemployerswithveryhighlevelsofEUmigrantdependencymayrelocateorclose.Supportfortheresultingredundantworkersisneededthroughthissameprocess,atthesametimeredeployingthemtofillthepoststhatwouldotherwisebeenheldbyEUworkers.
Itwillbeimportanttogenerateadditionalresource,aswellasre-taskingexistingresourcedeployedthroughcollegesandothertrainingproviders,todeveloptherelevantskillsinthedomesticworkforce,whichalsoincludesEUnationalsandnon-UKnationalsfromoutsidetheEUwhoarecurrentlynotemployedorunder-employed.OvertheyearsandacrosstheUK,manyshortlifepartnershipshavebeenestablishedtodealwithlargerscaleredundancies,butalsomajoremploymentexpansions.ThebestpracticefromtheseinterventionsshouldbepulledtogethertofeedintothedesignofBrexit-driventargetedemployabilityandskillsinterventions.
IntroduceMoreEffectiveEmploymentProgrammesInadvanceofareducednumberofEUmigrantscomingtotheUKtoworkinlowerskilledjobs,governmentfundedemploymentprogrammeshaveakeyroletoplayinhelpingmoreunemployedpeople,particularlythosefurtherfromthelabourmarket,increasetheirattractivenesstoemployers.TheUKhasnotperformedwellintermsofitsprogrammestoimprovetheemployabilityoftheunemployed,andmorespecificallyhasbeenweakinrelationtopeoplewithhealthconditionsanddisabilityissues.101 ThisisattheheartofpromotinginclusivegrowthintheUK.Employers–andgovernments–havehadlessimpetustoaddressthesechallengesasthegrowinglabourdemandsintheyearsbeforetherecession,andintheperiodofrecovery,havebeeneasilymetbyincreasingnumbersofmigrantworkers.Muchmoreinvestmentisnowneededinupskillingexistingemployeesandthosewhoareunemployed,andmoreeffectiveinterventionsneedtobebroughttobear.
GreggandGardinerarguethatthedesignprinciplesrequiredtodrivetowardsfullemploymentbyincreasingtheemploymentratesofdisabledpeople,thosewithhealthconditionsandothersunder-representedintheworkforceareasfollows:• Shifttheobjectivefromreducingunemployment(whichcanbeachievedinpartbypeoplecoming
offbenefitsand/ordeclaringthemselveseconomicallyinactive)towardsincreasingparticipationinemployment.
• Reducethestrongfocusonjobentryanddivertmoreefforttowardsreducingordelayingjobexits,particularlyforthe50plusagegroupanddisabledpeople.
• Tacklemoredirectlyandeffectivelydiscriminatoryemployerrecruitmentpractices.• Designbottomupemployabilityinterventionsthatfocusonthespecificissuesfacedbylocal
unemployedpeopleandtuneintolocallabourmarketopportunities,movingawayfromthetop-downmodelsthathavedeliveredsuchpoorperformanceoverthepast30yearsormore.102
Movingquicklytosuchanapproachwouldhelppreparepeopleforentrytothemoretargetedskillsinterventionsdiscussedabove
SupportEmployerstoImproveJobQualityWehavediscussedearlierinthisreportthepotentialimpactofBrexitonemployerswhosebusiness
101Dudley,C.,McEnhill,L.andSteadman,K.(2016).Iswelfaretowork,workingwell?WorkFoundation.
102Gregg,P.,andGardiner,L.(2016).TheRoadtoFullEmployment.Resolution Foundation.
41BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
modeliscurrentlyhighlydependentonEUmigrantlabour.ThetwobroadapproachessetoutabovefocusondomesticUKworkersasasubstitutesourceoflaboursupply.Afurther,complementaryapproachwouldinvolveencouragingemployerstoexplorepotentialimprovementstothequalityoftheirjoboffer(broadlydefined)whichwouldhelpthemattractandretainmoreemployees.Awelldesignedbusinessdevelopmentinterventioncouldincentiviseemployerswhomaywishtomovetowardsanewbusinessmodelwhichprioritisedfulfillingwork,butareunsurehowtocommenceandembedthisshift.
Thistypeofinterventionisnoteasytodesign.Therehavebeenmanyattemptsovertheyearstoencourageemployerstoinvestmoreindevelopingtheskillsoftheirworkforce,butevaluationstendtofindverylimitedpositiveandsustainablebenefitsrelativetothescaleofsupportfromthepublicpurse.Attemptstobuildupthecapacityoftheintermediaries–suchassectorskillscouncils–whoworkwithemployersonskillsissuesalsohavehadlimitedsuccessasexemplifiedbytheevaluationoftheUKCommissionforEmploymentandSkills(UKCES)co-investmentfundstopromoteemployerinvestmentinskills,innovationandgrowth.103However,weknowthatbusinessesaremorelikelytoaltertheirbehaviourwhenthereis,forexample,asignificantthreattotheirprofitabilityorindeedcontinuedexistence–andforsomecompaniesBrexitposesthesethreats.
DesignGeographicalandSectoralPilotsFocusingonsomeofthepartsoftheUKwheretherearesectorswithahighdependencyonEUmigrants,thereisthepotentialtodeveloppilotactivitythatdrawsoneachofthethreesetsofactionsoutlinedabove.ThedifficultyisthatbeforethedetailsofBrexitareagreed,itisdifficulttocarryouttheplanningrequired.However:• Itwouldberelativelyeasytocarryoutastatisticalexercisethatidentifiesthesub-regionslikelytobe
mostatrisk,andthesectorsandsub-sectorsinplay.• Astartcanbemadebyre-designingandenhancingnationalemploymentprogrammesalongthelines
recommendbyGreggandGardiner.• Developmentworkcouldbecarriedoutwithasmallnumberofsectorswherethejobprofiletendsto
scorepoorlyonarangeoffulfillingworkmeasuresandwhoarecurrentlyheavilydependentonEUworkers.Thetaskwouldbetotesttheirpreparednesstoembraceanewbusinessmodelinvolvingasignificantshifttowardsmorefulfillingworkandtestthekindofbusinessdevelopmentsupportneededtofacilitatethis.
Thefinalelement–thedeliveryoftargetedemployabilityandskilledinterventions–couldbeassembledrelativelyquicklyoncethespecificsofBrexitbecomeknownandtheimplicationsforspecificsectorsareclearer.
Issue3:ThreatstoEmploymentProtection
ThereareclearconcernsamongstarangeofstakeholdersthattherearepotentialthreatstotherightstoemploymentprotectionintheUKafterBrexit.ThisisinthecontextoftheOECD’sjudgmentthattheUKhasoneofthemostlightlyregulatedlabourmarketsamongthegroupofthelargestandmostadvancedeconomies.
Thelossofanykeyemploymentprotectionscouldimpactadverselyontheincidenceof‘atypical’formsofworkintheUKlabourmarket,butalsoworkplacewellbeingasitisbroadlydefined.Evenwithitscurrent
103UKCES(2016).EmployerInvestmentFundandGrowthandInnovationFund ProgrammeLevelEvaluation.
BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES42
employmentprotections,theUKhasexperiencedagrowthinpoorqualityjobsduringthepastdecade.Ifkeyprotectionsareremoved,itisdifficulttoseehowthisgrowthcouldbereversed.WhatcanbedonetoprotectthegainsthathavebeenmadethroughtheEU,atatimewhenparticipationinandthepoweroftradeunionsispossiblyatasecularlowpoint?Thisplacestheweightonbroaderbasedcampaigning,whereofcoursethetradeunionmovementhasapivotalroletoplay.
Twosuggestionsforsupportingcampaigningagainsttheweakeningofemploymentprotectionaresketchedoutbelow.
BuildanEvidenceBaseforCampaigningforExistingProtections.Therearemanydifferentformsofemploymentprotection,impactingondifferentgroupsoftheworkforceindifferentways.Usingfulfillingworkastheorganisingconcept,thereistheneedforasimple‘manifesto’whichsetsoutinaconciseway:• Thelinkbetweenspecificemploymentprotectionsandkeyelementsoffulfillingwork.• Estimatesforthenumbersbenefitingfromtheseprotections.• Thecharacteristicsoftheworkersbenefitting,andinparticularthevariousdemographicstowhichthey
belong.• Estimatesfortheextentofthebenefitsintermsoffulfillingworkflowingfromspecificemployment
protections.• Casestudiesofindividualworkersbenefitingfromspecificemploymentprotectionstoillustratetheir
value.Thisevidencebasecanthenbeusedinarangeofcampaigns,andbydifferentcampaigninggroups.Theevidencemustofcourseberobustanduptodate.
CreateaFulfillingWorkImpactAssessmentOveranumberofyears,impactassessmentshavebeencarriedouttoassesstheconsequencesforage,gender,disabilityandethnicityequalitiesofchangestokeyprocesses–suchasrecruitment,wagesettinganddismissal.InadvanceofanyreviewofthebodyofemploymentprotectionlawsandregulationswhichhaveemanatedfromtheEU,atoolshouldbedevelopedtohelpcarryoutassessmentsoftheimpactsonfulfillingworkthatwouldresultfromtheweakeningorlossofspecificemploymentprotections.Keyquestionswouldinclude:• Implicationsforthevolumeoflowqualityjobs.• Implicationsforthepeopleholdinglowqualityjobs• Whichgroupsoftheworkforceareatrisk?• Whatmitigationsareplanned,andtowhatextentaretheselikelytowork?
Thiscouldbuilduponandcomplementthecampaigningevidencebasediscussedabove.
Issue4:LossofEUStructuralFunds
ThemostimportantStructuralFundintermsofsupportingfulfillingworkisESF,andover46%ofthefundingisfromtheUKgovernmentandotherUKbodies.ThismakesitamatterofUKgovernmentpriorityastowhetherthistypeoffundisretained,reduced-orindeedincreased.TheevidenceisthatthoseorganisationscurrentlybenefittingfromESFneverthelessacceptthatitisafarfromperfectvehicle.Potentialactionsincludethefollowing:
43BREXIT AND FULFILLING WORK: RESPONDING TO THREATS AND EXPLOITING OPPORTUNITIES
Re-designandEnhanceESF-EconomyandLabourMarketAdjustmentFundAredesignedESFcouldbeusedtofundthetargetedskillsinterventionstohelpdomesticUKlabourfillvacanciesthatwouldotherwisehavebeentakenbymigrants.However,itcouldalsobeusedtohelpredeployworkersmaderedundantbecauseofbusinessdownsizing,closureorrelocationbeyondtheUKbecauseofBrexit.Ofcourse,muchmoreprofoundimpactsonlocalitiescouldresultifthereareseveredisruptionstotrade,whichwouldleadtoarequirementforamuchlargerEconomyandLabourMarketAdjustment Fund.
ThisnewfundshouldavoidtheproblemsassociatedwithESF.• Asalabourmarketadjustmentfund,itneedstobe strongly focused on job outcomes.• A ‘job’shouldmeetthecriteriaassociatedwithfulfillingwork,andshouldbesustainable.• Theresourcesshouldbedevotedtoserviceswhichpluggapsinratherthanduplicateexistingprovision.• Thereshouldbeagreaterresponsivenesstolocalemploymentandskillsneeds.• Theongoingmonitoringoftheeffectivenessoftheservicesdeliveredthroughthefundneedstobe
significantlyenhanced.• Theresourcesrequiredtoadministerthefundneedtobeminimised,allowingthemaximum
investmentintheservicesdeliveredtotheclienttoraisetheirskillsandemployability,whilealsotacklingotherissuesthatrestricttheiremployability.
ThissupportstheargumentofBaldwin,CollierandVenablesthattheBrexitfocusshouldbeonworkersandcommunities.104However,withasimilarapproachtothere-purposingof‘ERDF’funding,developmentsupportforbusinessesneedingtomoveawayfromthe‘poorwork’businessmodelcouldbetaken forward.
Conclusion
ThisreportarguesthattherearemanythreatsposedbyBrexitinrelationtofulfillingwork.However,therearealsoopportunities,notleastbecauseemployersandgovernmentsmayneedtofocusmoreonmaximisingthepotentialoftheexistingworkforce,includingthoseinlessthanfulfillingwork,butalsomembersofgroupsofthepopulationgenerallyunder-representedinemployment.• AsaconsequenceofBrexit,thenumberofpoorquality,lowpaidjobsmaydecline,andsoraisethe
overallqualityoftheemploymentofferacrosstheUK.• Thereisarequirementtoenhancetheeffectivenessofemploymentandskillsservices,soboostingthe
qualityoftheUK’slaboursupply.• Bothoftheabovecombinedcan,ifsustainedoveranumberofyears,begintopushtheUKtowards
higherearningsandhigherproductivityandamoreinclusiveeconomy,wherefulfillingworkisthenormandmuchmoreevenlydistributedacrossdifferentgroupsinsociety.
ThefinalsectionofthereportmakesanumberofpracticalsuggestionsonhowtoreducesomeofthenegativeconsequencesforfulfillingworkthatmightemergefromBrexit.Italsosketchesouthowpotentialopportunitiescanbeexploitedtopromoteaspectsoffulfillingwork.Thereisnodenyingthatthisischallenging.
However,thestarknessofthechallengethatmanybusinesses–andultimatelythegovernmentanditsagencies–willconfrontcouldbethecatalystforthedevelopmentandimplementationofmoreradicalpoliciestomakefulfillingworkthenormintheUKlabourmarket.
104Baldwin,R.,Collier,P.andVenables,A.(2017).‘Post-BrexitTradeandDevelopmentPolicy’.PolicyInsightNo.88,CentreforEconomicPolicyResearch.
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Annex: Approach to study
BroadApproachThreemainmethodsweredeployedtotakethestudyforward:• Anextensiveliteraturereview.• StatisticalanalysisfortheUK,theEUandOECD.• Consultationswithkeyorganisations.
LiteratureReviewAsignificantvolumeofreportsandstatisticalmaterialwassourcedfromthefollowing:• CBI.• CIPD.• EuropeanCommission.• Eurofoundation.• HouseofCommons.• HouseofLords.• InstituteforEmploymentResearch,UniversityofWarwick.• InstituteforEmploymentStudies,UniversityofSussex.• NESTA.• OfficeforNationalStatistics.• OECD.• ResolutionFoundation.• ScottishEnterprise.• TheMigrationObservatory,UniversityofOxford• TUC.
StatisticalAnalysisStatisticswerecollectedfromstandardUKdatasourcesthroughONS,butalsofromOECDdatabases.
ConsultationsAmixoffacetoface,telephoneandemailconsultationswerecarriedoutwitharangeofacademicsandindependentcommentatorswithanalyticalexpertise,aswellasrepresentativesfrompublicandvoluntarysectors,andofemployersandtradeunions.
ThisreportwaswrittenbyAlanMcGregor
December2017
ISBNnumber:978-1-909447-79-0