Forget everything you’ve heard about working life in modern Britain. It’s wrong | Torsten Bell
Eeconomic change is accelerating. Technology means industries are shrinking and expanding faster than ever. Young people are constantly changing jobs while companies are laying off at will, putting an end to the “work for life” enjoyed by previous generations. Everyone is moving across the country for work these days, leaving poorer parts of Britain and crowding out communities.
All of these statements are almost universally accepted as truths about 21st century Britain. They guide what decision-makers consider to be the important questions to ask and the right answers to give. However, they are all wrong, in many cases wildly. In most senses, the change has been flat or actually slowing down.
A safe option for anyone needing to sell an economics book over the last decade is to put a robot on the cover and warn that machines are taking our jobs and entire industries are about to be wiped out – from taxi drivers to lawyers.
History shows us that big structural changes are happening. There were 7.7 million manufacturing jobs in 1970 and there are only 2.5 million today. The share of jobs in professional services, education and health doubled over the same period.
However, this type of economic change, where labor moves from one industry to another, has been slowing since the 1980s. By the 2010s, it was operating at only a third of the rate seen 30 years earlier. , as Britain’s deindustrialisation is broadly complete. More recent trends, such as declining retail jobs and growth in the care sector, are minor in comparison and industrial change is in fact at its lowest pace in a century.
Economy-wide trends can hide what is happening to individuals, but here too the evidence points in the opposite direction to popular narratives. A job-hopping epidemic is something managers complain about rather than something that actually happens.
In 1993, the average job tenure was 60 months. Almost three decades later, it’s still 60 months. Nostalgia is a dangerous guide to just about anything – there never was a lifetime job.
The UK has a flexible labor market, where it is easy for workers to move or companies to hire and fire. But that doesn’t mean there’s a lot of movement or shooting.
The rate at which people change jobs has actually dropped by a quarter of a century this century, with only 2.4% of us having moved in the three months before the pandemic. The decline is particularly significant for workers considered most likely to move: young people.
We’ve seen a growth in less secure work, from zero-hours contracts to self-employment, but companies are much less likely to lay off these days. At the end of the 1990s, 0.8% of workers would lose their jobs each quarter; immediately before the pandemic which had halved. Modern business has nothing to do with The apprentice.
More young adults in university mean more departures to study. However, when it comes to young people moving across the country for work, it is now less common, down by a third between the late 1990s and late 2010s.
More broadly, strange ideas about exactly who is moving around the country are widespread. Take the talk of the so-called red wall seats that the Conservatives won in the last general election. You would think from the way people talk about Bolton and Ashfield that these constituencies have seen an exodus of young people, but their defining feature is that far fewer young people are leaving them than leaving other Tory seats richer – and by the way, far fewer people are moving in.
This huge gap between rhetoric and reality on issues of economic change. It focuses our attention on the wrong issues and leads us to the wrong answers, driving our politics down rabbit holes that do nothing to help us build a better Britain.
Worries about too much change distract us from the real disaster of the past decade: our levels of compensation and productivity haven’t changed enough. Before the financial crisis, productivity was growing at around 2% per year. Since then it has only averaged 0.4%, so our wages have only just returned to their pre-financial crisis levels when Covid hit.
Those who change jobs less, especially younger workers, have missed out on major pay increases: job changers typically get five times the pay increase compared to stay-at-home workers . Young people are not too free and do not want to feel free – they are dangerously stuck in the mud.
Far from any change is good, of course. Falling job losses mean fewer people are now seeing the downgrades and pay cuts that often follow. Instead of panicking over job destruction, we should focus on the fact that different groups face very different risks: the lowest-paid workers are six times more likely than managers to lose their jobs. They are the ones threatened by the Cameron-era decision to protect workers from unfair dismissal after just two years in the job.
Recognizing that workers are now less likely to move for new jobs gives us important lessons that are obscured by a misplaced panic about everyone moving around the country. This happens for a mix of good (there are now far fewer places people have to move to if they want to find work), bad (housing costs are rising faster in higher wage areas and put better-paying jobs out of reach for many) and important reasons, such as the desire to stay close to family, which policy must respectively reinforce, address and understand.
Finally, understanding that our recent past has not involved significant economic shifts should warn us that we may not be well prepared if this rate of change picks up. The pent-up desire for change during the pandemic has temporarily pushed employment moves to record highs, while the lasting consequences of the push to work from home remain to be seen. The consequences of Covid-19 and the rate at which our population is aging could combine with Brexit and the transition to net zero to reshape our economy over the coming decade. If they do, it will be a shock to British workers, businesses and the state. Our benefits system without its supplement to furlough does little to protect us against change, while UK companies have a weak track record of investing when new opportunities and challenges emerge.
Watching the triumph of Apollo 11 in 1969 taking humans to the moon was a formative experience for my father. Whenever told that technological change has accelerated, he notes that it took us another 50 years for Amazon to send William Shatner into space. He’s right, which is as true for economic change here on Earth as it is for travel to the stars.