Levelling Up through a focus on job quality

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The UK is one of the world’s most geographically unequal OECD countries, and spatial inequalities have increased over the past thirty years.

The UK Government won power on the basis of its pledge to ‘level up’ the country, gaining constituency wins within the Red Wall of traditionally Labour-held seats across the North and Midlands with a commitment to address regional disparities and generate new opportunities. They released new plans to deliver on its levelling-up agenda this week - through twelve key missions, each with target metrics for 2030 against which progress can be measured.

It’s welcome to see an explicit recognition that levelling up requires a focus on job quality. Too often in the past, policy-makers have focused on capital investment and transport rather than on skills, job quality and pay.

Indeed, one of the Government’s key levelling-up missions is to boost productivity, pay, jobs and living standards, particularly in areas which perform less well and they have set out an ambition for pay, employment and productivity to have risen in every area by 2030.

Delivering on this ambition will mean reversing a decade of wage stagnation and rising worker insecurity and a clear strategic commitment of how this will be delivered with clear measures through which we can gauge the direction of travel. We know that between now and the 2030 time horizon set out in the White Paper that there will be a minimum of 22 financial statements from the Chancellor of the Exchequer, two Spending Reviews and a General Election. Achieving these ambitions will require a pan-Governmental effort which sees each Department and intervention from the Treasury actively seeking to build on these plans, not distract from or disrupt them.

History suggests that this will represent an enormous policymaking challenge, not least because despite commentary often focussing on the rise in employment over the last decade, the reality remains that industrial change has seen many regions lose stable, secure jobs, across sectors like manufacturing and mining. In their place, new jobs that have been created have tended to be less secure, both in terms of providing stable hours, decent levels of pay and employee protections.

And although employment had risen during the last decade prior to the pandemic, wages had not kept pace. In real terms, earnings in 2019 were lower on average than in 2010. When coupled with increasing costs of living; rises in casual work without guaranteed hours; and increased self-employment and platform work which often lack employment protections, worker insecurity has increased rapidly.

The scale of insecurity in the labour market and its impact has also been brought into sharp focus through the pandemic, with workers in manual and lower-skilled occupations offered less protection. This insecurity has been particularly felt in sectors already undergoing significant change that has only been accelerated by the pandemic, such as retail.

To truly shift the dial and level up the across the UK, there will need to be concerted action across labour market regulation, skills policy reforms and welfare reforms – in addition to sustained investment and the devolution of powers away from the centre towards regional and local government.

We need to ensure that people who fall out of the labour market are provided with sufficient financial and employment support that equips them with the skills needed to access good work. And as Work Foundation research has highlighted, lower skilled workers access fewer training opportunities, which can lead to employees in lower skilled occupations being overlooked and stuck within low paid employment.

There is a role for employers to work constructively with local partners, including statutory bodies but also education providers, both private and FE Colleges, to ensure that critical skill needs that are held at a local level, by employers, are delivered on. The Government’s plans to put employers at the heart of the skills system, through mechanisms such as the Local Skills Improvement Plans, are promising but as our research has highlighted, they must be sufficiently focussed on those further away from the labour market and ensure a broad range of employer input.

More broadly, it is important that incentives are aligned within the skills system, drawing on the collective strengths of employers, councils and combined authorities as well as other bodies to ensure that initiatives are in place for all workers.

Meaningful devolution and deep, sustained investment will also be key to achieving better pay, increased productivity and improved living standards across the UK. Despite its new label, the challenge of regional inequality has scarred the UK economy for decades. Sustained and deep investment will be critical to this Government’s aspirations of achieving headway on this stubborn policy challenge. And it will be necessary for Government to devolve powers and responsibility to regional and local tiers of Government on a meaningful basis so that places can provide the solutions relevant to their areas.

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