Radical ‘Better Jobs Deal’ proposed to fix the modern labour market for millions of young people

Bold new approach required to help the one in three millennials who say they’ve been held back from moving jobs

A ‘Better Jobs Deal’ is needed to tackle fundamental flaws in the UK labour market and kick-start the prospects of millions of highly skilled young people at risk of being scarred by the recent crisis, the Resolution Foundation argues in a new report for the Intergenerational Commission published today (Monday).

The Kids Aren’t Alright – the first in a series of reports setting out policy ideas for the Intergenerational Commission to consider – says that a radical new approach to the labour market is needed, and proposes a ‘Better Jobs Deal’ to tackle precarious work, create better jobs in more productive industries, and support more young people to move jobs.

The Foundation says that youth unemployment was a key feature of the 80s and 90s recessions, and that active labour market policies introduced in response to those recessions played a major role in preventing a catastrophic loss of jobs in the wake of the recent financial crisis.

Instead, new challenges have emerged for today’s millennials – insecure work, stagnant wages, and a lack of job moving – all of which need to be addressed before they leave even deeper scars on young people’s careers.

The report finds that atypical work is prevalent among younger workers, with over half of all those on zero-hours contracts aged 16-34. It also reveals that in the aftermath of the financial crisis over a quarter of workers in their early 20s didn’t receive a pay rise for five years in a row, double the figure in the recessions of the 1980s and 1990s.

The Foundation says that the effects of the downturn are still being felt and notes that despite record high levels of employment, fewer people under 30 are planning to push for a pay rise this year than in 2008, when unemployment was as high as 8 per cent.

This lack of confidence and security in the labour market has also fed through to young people’s willingness to take key risks, such as moving jobs, that are central not just to their own pay but to our national productivity. According to new polling by Ipsos MORI for the Commission, over a third of millennials haven’t moved jobs either because they don’t want to take the risk, they believe there are no jobs with better pay or career prospects out there, or they don’t think they have the skills to try.

The Resolution Foundation says that with employment at a record high – and millennials more likely to be employed at the age of 30 than any previous generation – now is the time to take on these new labour market challenges.

The Resolution Foundation’s proposed ‘Better Jobs Deal’, echoing the ‘New Deal’ of the late 1990s, addresses three key elements of the modern labour market:

• Enhanced security:  guaranteed rights to a contract that reflects the hours people have worked to tackle exploitative zero-hours contracts, higher pay for many non-guaranteed hours and extending statutory maternity and paternity pay to the self-employed.
• Better workplaces: For the first time active labour market policies should focus on firms not just people, with a priority on raising productivity and skills in three low-paying sectors where the share of young people working has risen significantly – retail, hospitality and social care.
• Greater opportunity: a better deal for movers, including financial support for those wanting to move to a better job (for example with initial housing costs), climbers (investment in training to rise up within their existing industry) and switchers (funding for stuck employees to move into higher-productivity sectors).

It will be years before we can fully understand how deep the labour market scars are from millennials spending long periods in insecure and low paid work. The Foundation argues that simply assuming that these problems will disappear would be a dangerous mistake, and change is needed now.

Stephen Clarke, Senior Economic Analyst at the Resolution Foundation, said:

“Our approach to the UK labour market needs a sea change. The old approach helped ensure that the Great Recession didn’t hit us with the level of long-term unemployment seen in the recessions of the early 80s and 90s. But instead we’ve been presented with new challenges – a triple whammy of stagnating wages, insecure work, and too many young people not feeling able to take up opportunities to move on and progress.

“Too often our labour market policy is focused on the problems of yesterday not the challenges of today. Dole queues have been replaced by hidden insecurity and stagnant wages. The challenge is no longer just getting young people into work but increasing the security they have in that work and giving them the confidence and support to move jobs if that’s what they want to do.

“The UK has seen an employment triumph, but we now need a ‘Better Jobs Deal’ to face up to new challenges. If we fail to adopt new approaches we risk leaving a generation of young people struggling to get by and progress.”

Notes to Editors

• Copies of The Kids Aren’t Alright are available from the press office.
• Ipsos MORI polling of 2,584 adults (aged 16-75) in Great Britain between 24^th and 30^th November 2017.