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It's time to redesign policies underpinning security in the modern economy

Wherever you look in Britain’s jobs market, the trends are going in the wrong direction. In this blog, Dan Tomlinson, who recently joined JRF with a focus on technology, work, markets and risk, looks at the challenges that face millions of people in the modern economy, and ask big questions of policy makers.

Written by:
Daniel Tomlinson
Date published:
Reading time:
5 minutes

As I’ve started working here at JRF on the topic of Britain’s labour market, I’ve found myself thinking back to the classic cars that my grandad spent his retirement doing up and selling on. Impressive machines that delivered so much over the years, surprisingly resilient, but always in need of attention.

Britain’s labour market has been in a similar position for a long time. It’s delivered for us – impressive job growth in the 2010s supported living standards despite stagnant productivity. It’s surprisingly resilient – with the help of furlough it made it through the pandemic relatively unscathed; but it’s also always been in need of attention in one place or another.

The problem now is that it’s not just tinkering that will do the job, we need a more fundamental redesign. We’ve gone from having low unemployment, falling inactivity and a big focus on job quality pre-pandemic to a situation where labour market insecurity is falling off the radar but is still too high, inactivity has surged, and unemployment is now forecast to rise by half a million in 2023.

Insecurity is high, inactivity has surged, and unemployment is forecast to rise

Number of employees experiencing contract insecurity or volatile hours and pay.
Increase in number of 16-to-64 year-olds inactive owing to long-term sickness since the start of the pandemic.
Forecast increase in unemployment between now and Q2 2024.

Source: OBR, Economic and Fiscal Outlook, November 2022; ONS, Half a million more people are out of the labour force because of long-term sickness, November 2022; Resolution Foundation, Low Pay Britain 2022, May 2022.

This is where we find ourselves, and it’s why economic policy makers have big challenges on their hands when it comes to the UK labour market in 2023. It’s not just one thing going wrong, but almost all the lines are pointing in the wrong direction.

It’s this growing sense of urgency when it comes to needing the ideas and action to get the motor going again, which is part of why I’ve joined JRF to be part of the team here working on creating, making the case for, and funding examples of the big policy changes Britain needs.

My role at JRF will involve a focus on a cluster of areas centred on economic insecurity in the modern economy – work, technology, markets and risk – where we think there is work to be done in exposing what needs to change, providing practical policy solutions, and funding promising experiments or ideas that could show policy makers what good change looks like.

This will be both practical and ambitious: grounded in the realities of what’s happening and what could feasibly change policy-wise in the years ahead, but at the same time providing policy proposals that rise to meet the scale of the challenge before us. For JRF too – an organisation committed to being anti-racist as well as a place where research isn’t just done about people but done with people - we’ll want to create work that listens to and reflects the diverse experiences of people at the sharp end of the modern economy.

To start with we’ll focus on three big issues – inactivity, insecurity and unemployment – where both understanding what’s going on and how policy could make a difference is crucial:

  • Economic inactivity and ill health, where it’s clear there’s a big problem but other than ‘fix the NHS’ there doesn’t yet seem to be a suite of implementable policy answers to help reduce inactivity. Britain is stuck with inadequate sick pay and employment support which don’t do enough to help people with ill health into work - how could policy change help here?
  • Under-discussed dimensions of labour market insecurity, we’re starting a project in the coming weeks focussing on outsourced workers in the UK economy, but we hope to look in detail at other corners of the labour market that have suffered from a lack of policy attention in recent years. For example, it feels like we’ve been waiting for concrete policy proposals on what the rise of labour platforms (Uber, JustEat, and so on) means for employment status and the suite of rights and benefits that people working in these newer ways can access. Can JRF help push forward thinking in this area?
  • Income insurance, will Britain really continue having some of the lowest rates of income protection when job loss occurs among all advanced economies? Rates so low that many families can’t even afford the essentials? If not, what practical changes could work for our welfare system – changes that are all the more pressing given forecast increases in unemployment. More broadly, I’m interested in what different models we could use to protect people from various forms of risk in the modern economy, from collective risk pooling to traditional social insurance schemes.

Of course, please reach out if you think there’s some fruitful work to be done on a different topic that may fall within the ‘work, technology, markets and risk’ cluster. Equally, if you’d like to discuss any of the issues above in more detail, please do get in touch too. I’d love to hear from you.

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