Labour Market

No, the UK labour market is not characterised by job insecurity

Nearly a third of the UK workforce have insecure employment, according to new research from the GMB union, which warns of the impact on health and family life.

The union’s research tries to quantify the numbers in what it calls precarious employment – workers in the gig economy, on zero-hours or short-hours contracts, temporary workers, the underemployed and those at risk of ‘false’ self-employment. It puts the total at approaching 10 million.

It is worrying if some people do not seem to benefit as much as they might from the success of our high employment, low unemployment labour market. But the GMB’s findings, based on grossing figures up from their own survey rather than publicly available data, are misleading and don’t really help with thinking about appropriate policy.

It’s important to remember that, despite its relative flexibility, the UK labour market is not particularly characterised by job insecurity.  For instance, according to the last available figures from the OECD, temporary employment in the UK is just 6.2% of all employment. In Germany it’s 13.1%, in Italy 14.0%, in France 16.7%, in Sweden 17.2% and in Spain 25.1%. So if the UK has a problem, it is probably smaller than that of many other countries.

Of course, much temporary employment is inevitable, as it relates to particular short-term projects, and it is by no means always badly paid. Temporary agency workers, for example, seem to get a wage premium compared with permanent employees.

As for ‘short hours’ contracts, most of these are voluntary in the UK. Here just 15.9% of part-time workers would prefer a full-time job, but the figures for Sweden are 30.8%, France 40% and Italy 63.9%.

Much has been made of the growth in the UK’s self-employment rate, but the proportion of the workforce which is self-employed is significantly smaller than the EU average. More importantly, evidence consistently shows that those of us who are self-employed have chosen to be so, and are on average happier than those in conventional employment.

Even the much-discussed zero-hours workers seem to be less of a problem than they are often painted. A third are young people, many of them students. Other ZH workers have family or other commitments that make a standard fixed-hours contract difficult or impossible for them. Some are older workers supplementing pensions, or moonlighting from a full-time job elsewhere. By no means all are badly-paid; they include academics and hospital consultants as well as restaurant and retail workers.

Again, evidence suggests that many zero-hours workers are happy with their status. MacDonalds trialled the offer of fixed-hours contracts to their zero-hours staff, and only 20% seem to have taken up the offer. Banning or severely restricting ZH contracts, as both Labour and Conservatives threaten, would restrict employee choices and reduce the total number of jobs available.

All of this suggests that the GMB picture of a harsh working environment in the UK is way overdone. Of course, all employment is insecure in a market economy in some sense, as businesses have to adapt employment practices to ever-changing consumer and worker preferences, technological change and fierce international competition. GMB, with a majority of its members in the public sector, may think that legislation can alter this fact. But ill-conceived restrictions on employment – of which we have far too many already –likely increase apparent job security for some workers at the expense of others who lose jobs or cannot find work when  they enter or re-enter the labour market.

And ultimately even many of the ‘secure’ jobs of GMB’s public sector workers will be lost if a weakened private sector fails to generate enough employment and consequent tax revenue to pay for all those nurses and teachers.

Further IEA Reading: Working to Rule: The Damaging Economics of UK Employment Regulations

Editorial and Research Fellow

Len Shackleton is an Editorial and Research Fellow at the IEA and Professor of Economics at the University of Buckingham. He was previously Dean of the Royal Docks Business School at the University of East London and prior to that was Dean of the Westminster Business School. He has also taught at Queen Mary, University of London and worked as an economist in the Civil Service. His research interests are primarily in the economics of labour markets. He has worked with many think tanks, most closely with the Institute of Economic Affairs, where he is an Economics Fellow. He edits the journal Economic Affairs, which is co-published by the IEA and the University of Buckingham.

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