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    The 30/30/40 Labour Market
    Will Hutton presents a challenging analysis of labour market trends.

    from The Jobs Letter No.30 / 15 December 1995

    In Britain's new labour market, unemployment and low pay are no longer the sole measures of inequity and lack of social well-being. With the rise of new forms of casualised, temporary and contract forms of employment, even those on average incomes and above can become the victims of pressures beyond their control.

    British economic columnist Will Hutton writes in the Guardian Weekly that the chances of the British losing their jobs, of their incomes falling, of their homes being repossessed or being impossible to sell, of their networks of friendships disintegrating ... are at their highest since the war. We here give an essential summary of Hutton's map of the new labour market.

  • ON THE 30/30/40 SOCIETY
    The developments in the labour market have led to a new categorisation of British society. There is a bottom 30% of unemployed and economically inactive who are marginalised. Another 30%, who, while in work, are in forms of employment that are structurally insecure. And there are only 40% who can count themselves as holding tenured jobs that allow them to regard their income prospects with any security.

    The 30/30/40 society is a proxy for the growth of a new inequality and the new risks about the predictability and certainty of income that have spread across all occupations and all classes.

    For the bottom 30%, the risk is that poverty will turn into an inability even to subsist, and that marginalisation will change into complete social and economic exclusion. 8% of people are unemployed, and 4% have been out of work for more than a year which means total social exclusion. The work the unemployed do find is part-time, casualised or insecure, so that their lives consist of unemployment interspersed with periods of insecure semi-employment.

    The worrying figure is the 21% of the working population who are now economically inactive of working age but not making themselves available for work. 20 years ago this segment was mostly made up of women voluntarily withdrawing from the labour market to bring up children. Now it is largely peopled by men of working age and single parents.

    It is no bed of roses for the 30% who are newly insecure. More and more risk has accrued on workforces as successive Employment Acts have reduced employee protection and as companies have come under intense and growing pressure from pension fund and insurance company shareholders to deliver the highest financial returns over the shortest period in the industrialised world.

    Companies can more profitably manage the ebb and flow of demand over the business cycle if they reduce their core staff to a minimum and hire additional workers on contracts which will allow them to be shed quickly if times get tough. The companies bear less risk. The risk is now borne by their fluctuating workforce.

    The rapid growth of part-timers without any formal job security, contract workers, workers sacked and then re-hired as self-employed, temporary, part-time self-employed, and temp agency workers are the true indicator that employment conditions have changed. Self-employment alone has doubled in the past ten years. 70% of all new part-time jobs are for 16 hrs or less, and so do not attract employment protection or any benefits such as holiday or sickness entitlements.

    There has been a marked growth in forms of work that are not "tenured". With full-time workers only qualifying for tenure after two years, the recent pick-up in full-time work means little. They can be laid off within two years as easily as they were hired.

    Members of this group range from the workers still covered by union wage agreements to full-time tenured employees working in the great organisations in the public and private sectors, and the full-time self-employed. But the numbers in this group have been shrinking by 1% a year on average. Market-testing, contracting-out, downsizing and de-layering are steadily transferring workers into much less secure work patterns. By the year 2000, tenured full-time employment, around which stable family life has been constructed along with the capacity to service 25-year mortgages, will be a minority form of work.

    With nearly 70% of homes owned by their occupier, one bulwark against financial calamity has been rising house prices. For 45 years, the average British household steadily grew more wealthy on the back of the great house price boom. But the fall in house prices in real terms over the 1990s caused the most savage reversal in personal wealth since the war. The operation of the housing market, with more than a million home owners having mortgages that exceed the value of their house (negative equity) and every mortgagee paying high real interest rates to own an asset that is falling in value, is now a source of insecurity in its own right...

    As the risk of insecure, or no employment grows, so the social institutions and systems built up over the past 50 years to protect against the risk are decaying. The welfare state is now threadbare, and eligibility for income support itself worth less in relation to average incomes is ever tougher. Trade union's capacity to protect against sudden and sharp deteriorations in working conditions has been reduced.

    All this has been justified by a narrow concept of "efficiency". It is said to be efficient for firms to have lean core workforces, for the provision of welfare to be privatised, for unions to be less powerful. But perversely the promotion of uncertainty and insecurity has made the operation of the economy as a system less efficient. It has weakened the growth and stability of demand, it has reduced firms' incentives to invest in their workforces and their infrastructure, it has inflated current public expenditure and reduced the tax base.

    The forces generating the 30/30/40 society could be arrested. A more determined assault on long-term unemployment; extending employment rights to those not in full-time work; relieving companies of the pressure to make sky-high financial returns; constructing more solid systems of social support; placing less emphasis on home ownership as the only form of housing tenure all could help.

    To act in this way is supposed to be inefficient. But not to act in this way is more inefficient still. In the long run a 30/30/40 society is neither desirable nor sustainable. One day the pendulum will swing back because it must.

    Source - The Guardian Weekly 12 November 1995 "High-risk strategy is not paying off" by Will Hutton

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