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.
- ON THE 30% DISADVANTAGED
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.
- ON THE 30% NEWLY INSECURE
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.
- ON THE 40% ADVANTAGED
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.
- ON LOSING HOUSING PROTECTION
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...
- ON THE DECAY OF SOCIAL PROTECTIONS
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.
- ON WHAT TO DO NOW
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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