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What’s going on in the UK labour market?

There have been dramatic changes to the structure of the UK labour market over the past two decades. Middle-skilled occupations have been in decline (especially in routine-administrative roles) while jobs at the top of the earnings distribution and bottom have increased as a share of overall employment.

To some extent this longer-term ‘hollowing out’ has been replicated across Europe. However, recent research highlights the particularly strong growth in lower-skill jobs in the UK labour market in the period between 1996 and 2008.

In most countries growth in higher-skill jobs dominated growth in low-skill jobs during this period, but this was not the case in the UK, where the increase in low-skill occupations as a share of employment was found to have exceeded the growth in high-skill ones. Only one other European country (the Netherlands) showed the same pattern.

While there is some debate over the rate of growth in higher skilled jobs (related to the precise definition used), the strong growth in low-skilled jobs in the UK is less contentious. It is also a trend which appears to have continued in recent years. 

The author points towards a number of factors that go some way to explaining higher growth in low-skill employment in the UK, including relatively weak employment protection legislation and low minimum wages. One could add to this the UK’s emphasis on active labour market policies which are increasingly aimed at incentivising people to find work quickly, with limited attention to job quality or suitability.

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