By Lisa Harker
11 February 2010
Unequal Britain can’t be changed simply by giving individuals ‘opportunities’, argues Lisa Harker. It needs a government prepared to invest in more skilled jobs for the future and to narrow the earnings and geographical gaps
The gap between rich and poor is now greater within different social and ethnic groups than it is between them, the National Equality Panel report on inequality revealed last month. The rigorous evidence shows wide disparities from cradle to grave across the UK. Class shapes people’s lives from the grades they achieve at school to the amount they earn and the age at which they die.
Responding to the NEP report, minister for women and equality Harriet Harman said that class now ‘trumps’ ability, race and gender as a driver of disadvantage. This echoes Communities Secretary John Denham’s assertion a few weeks ago that race inequality can be addressed only by creating ‘equality for all’.
But the debate on whether class or race drives disadvantage hides the real problem: a lack of political appetite or fresh policy responses to tackle the deep-seated causes of inequality. We would do well to start with a more honest debate about the future of the labour market and its implications.
The UK labour market has changed enormously over the past four decades. In workplaces ranging from manufacturing plants to offices, technological advances have replaced British workers in many unskilled and semi-skilled jobs. There are far fewer workers on production lines and hundreds of thousands of secretarial, clerical and administrative jobs have disappeared. Increasing international competition has led to the decline of industries that were once central drivers of economic growth in this country.
New jobs have not always emerged in the same places as old jobs were lost – creating a patchwork of deprived inner-city areas, where 70% of people from ethnic minorities live.
The same trends are responsible for deprivation among the white working classes, a fact the British National Party has capitalised on. Low-skilled men have fared particularly badly in the shift to a service economy. For people who have grown up in traditional industrial or mining communities, a career in customer service might not present an attractive prospect.
The National Equality Panel found that in England’s most deprived 10% of areas, an astounding 45% of working age adults are unemployed. While private firms gravitate towards the Southeast, many Northern regions rely on the public sector for jobs. Prospective job cuts in public services will only intensify the geography of inequality.
Over this period, UK industry has failed to generate sufficient numbers of semi-skilled jobs in new industries to compensate for those lost, principally in manufacturing. Manual jobs lost in recent years have often been replaced with low-paid, insecure jobs that rarely provide obvious routes to better-paid, high-status employment. The contrast with those who have ridden the wave of a burgeoning knowledge economy could not be more stark. Bosses now earn 98 times the average wage of their workers – a ten-fold increase since 1979.
In the face of such changes, politicians across the spectrum have voiced concern about low aspirations among deprived groups and pledged to help improve individuals’ ambitions and skills. The key to social mobility, they argue, is to give everyone the chance to better themselves.
But while such an approach is surely the hallmark of a fair society, Britain’s economy looks set to remain reliant on low-skilled, low-wage employment. Research from the Institute for Public Policy Research has highlighted that by 2020 the number of jobs requiring no qualifications on entry is likely to be much the same as now – around 7.4 million. This is because, despite increasing demand for skills in pockets of the economy, sectors that traditionally have had large proportions of low-paid jobs requiring few qualifications – such as retailing, hotels and restaurants and customer services – are projected to grow.
But the number of people with few or no qualifications is expected to fall over the next decade. It is projected that by 2020 only 600,000 people in employment will have no qualifications, a fall from the current 2.5 million. For the millions who will continue to work in low-wage employment there will be little room to progress – primarily because there will not be enough skilled jobs to go around. Evidence suggests the postwar expansion of professional and managerial roles could be levelling off, leaving even less room at ‘the top’.
So here’s the rub. For income inequalities to fall, it will not be enough to rely on individuals’ agility to ride the waves of the labour market.
Perhaps the government should focus as much on progression in work as it does on tackling unemployment. Part of the solution is to create both clearer career ladders in low-skilled industries and training opportunities and qualifications that fit with these ladders. This would allow people to study, knowing that if they were successful they would have a good chance of getting a better-paid job.
A more radical approach would be for Britain to choose to build a different kind of economy. The financial crisis could be an opportunity to do just that. As the UK limps out of recession, we need a strategic government to support jobs of the future with investment in training, infrastructure and research and development. New business ideas and innovations in science, technology, engineering and mathematics will be crucial to increasing the UK stock of skilled jobs.
For a more diverse and equally distributed economic base, juicier carrots and sturdier sticks must drive firms to relocate to deprived areas and provide support for small- and medium-sized enterprises and the self-employed. The vast gap in earnings needs to narrow substantially, whether through government action to tackle excessive pay and an increase in the minimum and London living wage – or because it becomes socially unacceptable to live with such a divide.
So far there appears to have been little appetite to look beyond restoring economic growth as quickly as possible. But what if shadow chancellor George Osborne added a ninth economic benchmark to the eight he recently spelt out to reduce Britain’s dependence on a low-wage economy? It would certainly focus minds on the kind of labour market Britain aspires to as it comes out of recession. And it would force us to consider why we continue to reward certain types of work quite so unequally.
Lisa Harker is the co-director of the Institute for Public Policy Research
11 February 2010
Unequal Britain can’t be changed simply by giving individuals ‘opportunities’, argues Lisa Harker. It needs a government prepared to invest in more skilled jobs for the future and to narrow the earnings and geographical gaps
The gap between rich and poor is now greater within different social and ethnic groups than it is between them, the National Equality Panel report on inequality revealed last month. The rigorous evidence shows wide disparities from cradle to grave across the UK. Class shapes people’s lives from the grades they achieve at school to the amount they earn and the age at which they die.
Responding to the NEP report, minister for women and equality Harriet Harman said that class now ‘trumps’ ability, race and gender as a driver of disadvantage. This echoes Communities Secretary John Denham’s assertion a few weeks ago that race inequality can be addressed only by creating ‘equality for all’.
But the debate on whether class or race drives disadvantage hides the real problem: a lack of political appetite or fresh policy responses to tackle the deep-seated causes of inequality. We would do well to start with a more honest debate about the future of the labour market and its implications.
The UK labour market has changed enormously over the past four decades. In workplaces ranging from manufacturing plants to offices, technological advances have replaced British workers in many unskilled and semi-skilled jobs. There are far fewer workers on production lines and hundreds of thousands of secretarial, clerical and administrative jobs have disappeared. Increasing international competition has led to the decline of industries that were once central drivers of economic growth in this country.
New jobs have not always emerged in the same places as old jobs were lost – creating a patchwork of deprived inner-city areas, where 70% of people from ethnic minorities live.
The same trends are responsible for deprivation among the white working classes, a fact the British National Party has capitalised on. Low-skilled men have fared particularly badly in the shift to a service economy. For people who have grown up in traditional industrial or mining communities, a career in customer service might not present an attractive prospect.
The National Equality Panel found that in England’s most deprived 10% of areas, an astounding 45% of working age adults are unemployed. While private firms gravitate towards the Southeast, many Northern regions rely on the public sector for jobs. Prospective job cuts in public services will only intensify the geography of inequality.
Over this period, UK industry has failed to generate sufficient numbers of semi-skilled jobs in new industries to compensate for those lost, principally in manufacturing. Manual jobs lost in recent years have often been replaced with low-paid, insecure jobs that rarely provide obvious routes to better-paid, high-status employment. The contrast with those who have ridden the wave of a burgeoning knowledge economy could not be more stark. Bosses now earn 98 times the average wage of their workers – a ten-fold increase since 1979.
In the face of such changes, politicians across the spectrum have voiced concern about low aspirations among deprived groups and pledged to help improve individuals’ ambitions and skills. The key to social mobility, they argue, is to give everyone the chance to better themselves.
But while such an approach is surely the hallmark of a fair society, Britain’s economy looks set to remain reliant on low-skilled, low-wage employment. Research from the Institute for Public Policy Research has highlighted that by 2020 the number of jobs requiring no qualifications on entry is likely to be much the same as now – around 7.4 million. This is because, despite increasing demand for skills in pockets of the economy, sectors that traditionally have had large proportions of low-paid jobs requiring few qualifications – such as retailing, hotels and restaurants and customer services – are projected to grow.
But the number of people with few or no qualifications is expected to fall over the next decade. It is projected that by 2020 only 600,000 people in employment will have no qualifications, a fall from the current 2.5 million. For the millions who will continue to work in low-wage employment there will be little room to progress – primarily because there will not be enough skilled jobs to go around. Evidence suggests the postwar expansion of professional and managerial roles could be levelling off, leaving even less room at ‘the top’.
So here’s the rub. For income inequalities to fall, it will not be enough to rely on individuals’ agility to ride the waves of the labour market.
Perhaps the government should focus as much on progression in work as it does on tackling unemployment. Part of the solution is to create both clearer career ladders in low-skilled industries and training opportunities and qualifications that fit with these ladders. This would allow people to study, knowing that if they were successful they would have a good chance of getting a better-paid job.
A more radical approach would be for Britain to choose to build a different kind of economy. The financial crisis could be an opportunity to do just that. As the UK limps out of recession, we need a strategic government to support jobs of the future with investment in training, infrastructure and research and development. New business ideas and innovations in science, technology, engineering and mathematics will be crucial to increasing the UK stock of skilled jobs.
For a more diverse and equally distributed economic base, juicier carrots and sturdier sticks must drive firms to relocate to deprived areas and provide support for small- and medium-sized enterprises and the self-employed. The vast gap in earnings needs to narrow substantially, whether through government action to tackle excessive pay and an increase in the minimum and London living wage – or because it becomes socially unacceptable to live with such a divide.
So far there appears to have been little appetite to look beyond restoring economic growth as quickly as possible. But what if shadow chancellor George Osborne added a ninth economic benchmark to the eight he recently spelt out to reduce Britain’s dependence on a low-wage economy? It would certainly focus minds on the kind of labour market Britain aspires to as it comes out of recession. And it would force us to consider why we continue to reward certain types of work quite so unequally.
Lisa Harker is the co-director of the Institute for Public Policy Research
