Fluctuating working hours, and the falling quality of CEOs

Morning all,

Well, the new parliamentary session has certainly delivered a serious dose of reality after August’s silly season – and I expect both the stark conclusions of the Grenfell Inquiry and the political row over Winter Fuel Payments are likely to keep rattling around for a while to come.

Keep an eye out for the Resolution take on tackling fuel poverty in the coming weeks. For now, keep reading for an idea of how Chief Executives have changed, and an assessment of the upward mobility of migrants.

I hope to see some of you at our conference on Monday to discuss the future of wealth and savings policy – do watch along online if you haven’t been able to nab an in-person ticket. (We turned on the Ticketmaster dynamic pricing algorithm, only to discover that tripling our advertised price of £0 still came to £0. Ah well.)

Have a great weekend,

Mike

Interim Chief Executive
Resolution Foundation

Seriously searching. The jury has (arguably) been out on the question of how effective DWP support for Universal Credit (UC) recipients actually is. On the one hand, some view it as ineffective, while others see it as both ineffective *and* bullying. But recent research from the Department for Work and Pensions finds that intensive support from Jobcentres can help working UC claimants to earn more. After a year, people with the extra support earned roughly 20 per cent (or a £100 a month) more than those without the extra help. On paper, this is a good thing for claimants and the DWP. But what isn’t clear is whether the higher earnings came about because claimants were genuinely supported to find more or better work, or whether it was due to additional pressure and scrutiny (although there is no evidence that the work was any less secure than it might have been for those getting the extra attention). With the Government targeting an 80 per cent employment rate, I am sure these results are being poured over even now.

Dreadful deindustrialisation. The swift deindustrialisation of the 1980s has left a lasting mark on the political geography, culture and regional economies of the UK – unsurprisingly given that it was the fastest deindustrialisation in the developed world. So, what can we learn from industrial decline? This blog considers the aftermath of the collapse of British coal production. Many of you will know that towns and regions that used to be economically reliant on coalfields now make up many of the most-deprived areas of the country. And it doesn’t get any less stark when you dig into the detail – individuals exposed to pit closures in childhood are more likely to be shorter, to have unhealthy levels of BMI (either extremely high or extremely low), to have less healthy children of their own, and to accumulate less wealth. It’s clear that swift deindustrialisation has a lasting negative effect on local communities, which reverberates through multiple generations. Turns out it’s not all ballet-dancing and brass-band-playing in these former mining towns.

Changing chiefs. A lot has changed since the dawn of the new millennium – but are chief executives included in that? This paper compares the characteristics of CEOs and execs between 2001 and 2019. Be warned, it’s fairly scathing stuff. According to their assessment, the Big Cheeses of the corporate world are less able, less charismatic, less creative and less strategic since 2008. Ouch! (It’s very different in the think-tank sector, I can assure you). But how come this decline in quality hasn’t been flagged? Well, a different paper suggests that top earners are experiencing less face-time with lower earners than they used to, especially in advanced capitalist economies. The authors find a dramatic increase in the isolation of top earners at work over the last twenty years, significantly more so than with other forms of social segregation. So, CEOs are getting worse, but they’re lunching alone in the hope no-one will notice.

Isolation illness. There has been plenty of talk in the years since the first Covid lockdown about a loneliness epidemic. About 1-in-12 (8 per cent) adults say they feel lonely often or always. This has increased the focus on whether loneliness can increase the risk of high blood pressure, heart disease and cognitive decline. Given this context, the folks over at Nesta have decided to take a look themselves at the implications of loneliness on health outcomes. They find that loneliness causes worse mental health and wellbeing and on a significant scale – those who report feeling lonely are over twice as likely to have been diagnosed with depression, compared to those who have not reported feeling lonely – but they find no link with wider health outcomes. Nonetheless, this would still suggest that strategies to tackle loneliness and isolation will pay off by improving mental health and reducing demands on the health service. Plus, I think we would all appreciate living in a slightly less lonely world.

Migrant mobility. If there is ever a debate that could do with hard evidence, it’s the economic consequences of migration, so it’s great to see this new research from the Migration Observatory. They find that a substantial share of migrants to the UK leave the workforce within a few years – of the EU-origin migrants who were on PAYE in 2015, only around 50 per cent remained so in 2023, much lower than the five-in-six UK-born workers.  Return migration is likely to be the major driver of this, although some might have also stopped working to care for children, become unemployed, or moved to self-employment. Meanwhile, the earnings of non-EU migrants that entered the workforce between 2015 and 2021 exceeded UK median earnings within a few years, and the pace of wage growth for this group has been increasing among recent cohorts. This could point to a higher skill profile of the more recent (pre-2022) non-EU migrants, the paper suggests, but those pay gains are not to be sniffed at.

Chart of the week

This week’s chart is a sneak preview of work we’re carrying out with LSE’s Stephen Jenkins on earnings volatility – i.e. how much your pay changes from month-to-month. This volatility can pose huge challenges for families – it’s hard to save and plan ahead if you don’t know how much income you have from one month to the next. But how likely are you to experience it? Much more so, if you work in a low-paying sector like hospitality and social care, as COTW shows. The average hospitality worker will see their pay change by around a fifth from month-to-month – that’s two-thirds higher than non-low-paying sectors.  Employers will tell you this is simply due to supply and demand, which clearly does fluctuate in some aspects of hospitality. But I’d wager that high earnings volatility is compounded by the lack of power that workers have, which also results in insecure employment contracts like zero-hour contracts becoming industry norms. The Government proposes to address this through its ambitious ‘new deal for workers’, an approach which we’ve assessed in our latest Low Pay Britain report. This is a welcome strategy, and could make a huge difference to millions of workers, but only if the details are got right. For example, a new ‘right to a contract that reflects the number of hours they regularly work’ will be welcome to many of the one-in-twelve low-earners currently on a zero-hours contract. But will it reduce earnings volatility? A similar sounding ‘right to banded hours’ in Ireland was introduced to maintain workers’ income over a 12-month period, but hasn’t affected the short-term volatility of that income. A different approach will be needed in the UK if we’re to give low earners the security of earnings and employment that many of us take for granted.