Labour Market Polarisation revealed by New Study

Posted on 19 November, 2013 by Kirsten Kennedy

Although employment figures appear to have taken a turn for the better in recent months, issues such as underemployment and youth unemployment remain major issues for the country’s labour market. Now a new study conducted by the London School of Economics (LSE), in partnership with think tank Resolution Foundation, may have come up with a theory as to why young people are struggling to find full time employment.

The study, entitled A Polarising Crisis, has warned that the UK labour market may be heading towards a two-tier foundation due to four years of recession. In essence, this means that while there is an abundance of low pay, low skill roles and high paid, high skilled jobs for the taking, middle tier positions as defined by average pay are very much in short supply.

It was discovered that the number of British workers in middle-paid roles fell by 170,000 between 2008 and 2012 – the years in which the recession was the greatest economic issue – meaning that only 14.61 million employees fit into this category. Yet the number of workers in the low paid category rose by 190,000 to 7.76 million and higher paying roles climbed by 140,000 employees to 6.79 million, making middle paying roles the only sectors of the labour market in contraction.

Report author and director of policy at the Resolution Foundation, James Plunkett, believes these findings could have a huge impact upon the balance of recovery in the UK economy.

He says; “It is well known that the last few years have hit employment hard, but they have also reshaped our labour market.

“With low- and high-skilled occupations expanding while middle-skilled occupations decline, the worry is that the UK is drifting towards a two tier labour market and a recovery which isn’t broadly shared.

“The challenge for policymakers is to ensure that more workers can access the top job that are expanding, while at the same time acting to raise the pay and quality of the growing number of jobs at the bottom of our labour market.”

In terms of youth unemployment, this challenge if met could certainly prove to be a valuable move. As more and more university graduates struggle to get on to the careers ladder, the contraction of the middle-skilled employment sector means that the traditional way of getting their “foot in the door” becomes more and more unlikely.

Graduates are instead being forced into roles for which they are over-skilled, with the lowest paying hotels and restaurants sector becoming the most popular avenue. During the period with which the study is concerned, this sector grew by 17 per cent, equating to 218,000 jobs created in just four years.

In order to regain balance in the economic recovery, this issue must be addressed to offer young graduates the chance to work their way up from the bottom, giving them the knowledge and experience to aim for the highest paid roles open to them.




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