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Current U.K Labor Market Conditions Coursework

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Updated: Jun 12th, 2022

The paper aims to discuss the UK labor market conditions and characteristics focusing on their impact on policies and practices within the human resource function.

U.K Labor Market

The world of work has changed. Swiftly expanding developing and emerging economies, new technologies, and an increasingly international labor market are all having a tremendous significant impact on the overall demand for and supply of distinctive skills, prospects for employment, organizational practices and structure, productivity, inequality, and growth. As one of the world’s primary employment agencies, labor is seeking to contribute directly towards analysis of and policy debate related to these issues as an integral part of endeavors to display thought leadership in this specific new world of work. The paper outlines the features and characteristics of UK labor market. It then proceeds to discuss and present arguments focusing on the impact of such features and characteristics on the policies and practices within the human resource function.

Statistics in UK Labor Market

The unemployment rate in United Kingdom, according to a study, rose to 5.8%- up 0.4% over the quarter and also 0.5% on last year. Moreover, 29.4 million people were employed in the period from July to September as quoted by labor force survey. Recession in the economy continue to influence employment figures which has significantly decreased by ninety nine thousand on the quarter, yet still up by one hundred and thirty four thousand on the last year. Rate of working age employment is 74.4% which is down by 0.4% on the last quarter and down 0.2% on the last year.

Manpower- A Global Leader in the Employment Services

Manpower is the global leader in the employment services industry focusing and offering its clients a broad spectrum of services for the business cycle and entire employment that also includes temporary, permanent, and contrast recruitment, assessment and selection of employee; outplacement, training, consulting and outsourcing. The focus of work by manpower is on increasing productivity through efficiency, improved quality, and cost-reduction across their customer’s workforces, facilitating them to focus on their primary business activities. (Fernie 2007)

The labor market is of critical significance for material well-being and the overall performance of economies. It has long been a core focus of research activities- and the resulting evidence and analysis have had a main impact on the people’s understanding of unemployment, inequality as well as primary interventions within the human resource functions. Almost two decades earlier, a large segment of people believed that higher rate of unemployment was inevitable. It was viewed as the result of technological change that could continuously generate the ‘end of work’. Some believed that different jobs were ultimately unaffected by many people hunting for work.

The labor market of U.K has a high percentage of people in employment; almost three quarters of people, in the working age, have jobs. This proportion is, in fact, more than Germany, France, and even the United States. While the Big nations of continental Europe- Germany, Spain, Italy, and France- have comparatively high unemployment, most of the countries, including the U.K- which have adopted and implemented different policy proposals evolving from research activities have comparatively a low rate of unemployment. (Fernie 2007).

Inactivity Rate in UK

Although, the high rate of unemployment has been successfully tackled, an overall new labor market complication has also evolved; inactivity; in which significant number of people are neither in work nor searching for a job. Research highlights that inactivity rate in UK for working age men over twenty five years of age has increased by almost a multiple of four since the decade of 1970s. (Fernie 2007)

Moreover, men in the prime age- between twenty four and fifty four- the rate of inactivity is about five times higher as compared to the mid-1970s. Inactivity is specifically concentrated in men who are not only skilled but suffering from disability or a health problem. (Fernie 2007)

One basic change causing increase inactivity is the dramatic deterioration of demand specifically for unskilled labor since the mid-1970s. This is primarily due to technological advancements, which has facilitated the more educated, for instance, computer use- and to some extent, the phenomenon of globalization- and also exports from nations having a large number of unskilled workers. There has been a general rise, at the same time, in the supply of skills, but it has not been swift enough in the United Kingdom to keep up with the rising demand. (Driffield 2006)

Push and Pull Factors

Rate of employment regarding low skilled workers in United Kingdom have fallen, but it is pertinent to highlight the reasons of non-employment which is heavily focused on inactivity contrary to unemployment. Researchers have highlighted both ‘push’ as well as ‘pull’ factors. The primary push factors is that as the market of low skill labor weakens, most of the people at risk are those who have more disadvantages, for instance having disability that restricts the type of work they are capable of doing. As such unskilled men, in particular, having a disability or suffering from a chronic disease were more affected. It was more difficult for them to find any type of work, and as such the system of social security found it much simpler to shift them onto inability or incapacity advantages.

The main pull factors include specific incapacity advantages that were substantially more generous as compared with unemployment advantages. Moreover, this gap has increased from the decade of 1980 to the middle of 1990s before it retreated in the later half of 1990s. Strategy of the UK government to reverse the increase in activity comprise the New Deal focusing on Disabled People and also the pilots of ‘Pathways-to-Work, active market policies related to labor aiming to offer assistance in job search which have had a varied record of success. Moreover, the welfare program offered in 2006 named as ‘Green Paper’ suggests making direct access to incapacity advantage strictly focusing on supporting the flow of new entrants. (Blanchflower 2007)

The Minimum Wage in UK Labor Market

A significant policy in the UK labor market is the National Minimum Wage, which was primarily introduced for the first time in the history of United Kingdom in 1999. This is regarded as the most important intervention in the labor market since 1997. In fact, the minimum wage is an integral part of a huge package of reforms specifically designed and implemented to ‘make work pay’. (Blanchflower 2007)

The focus of these reforms is to provide a tax credit that could support and increase take-home pay of low wage workers. The minimum wage is an essential part of reforms as it does not allow employers to cut down wages with the knowledge that workers will ultimately not be worse off. Before induction of the minimum wage, different claims existed that it would result in destroying almost two million jobs. Moreover, the inflation rate will consequently increase. However, these fears did not materialize and the controversy, mainly political, covering the minimum wage in the decade of 1990 has ultimately been transformed into a specific consensus. (David 2005)

The potential employment impacts of the minimum wage are some of its controversial features. The conventional view by the economist regarding this issue is that when confronted with an overall increase in the cost of labor because of minimum wage, organizations will mostly decrease the supply of labor employed by them. However, according to an alternative view, the practice in labor market could not be effective as in theory and as such organizations have monopoly power over labor. Therefore, firms are in a position to set wages which are far below the current wage level; requiring them to pay much higher wages and could motivate high level of employment.

The main aim of the minimum wage in United Kingdom has been to support a fair wage particularly to low paid workers without restricting the opportunities related with employment or hurting the overall efficiency of business. Although most of the workers have received benefits from the policy, inequality in overall wage has not decreased- but it is most likely that inequality would have increased even more without minimum wage. (Blanchflower 2007)

Educational Achievements

One common characteristic across the European Union is the continuous increase in the level of educational achievements and qualifications of young entrants in the labor market. In UK, this has been particularly dramatic with regards to higher education where the ratio of the age group obtaining their graduation degrees from universities has increased, almost doubled, in almost ten years. This has led some employers to hypothesize that there has been some deficiencies in the education system. (Ness 2006)

It has, however, increased the supply of potential job candidates in different fields and as such led to the utilization of more sophisticated and refined screening of the entrants having graduate degrees; extra testing, interviews, and presence at the selection centers as well as presentations are becoming more popular. Employers are also using modern techniques, embarking on particular second-tier hiring or recruiting until the overall expansion of higher education, would probably have been selected and recruited from school directly. (Dickens 2007)

There are major concerns in United Kingdom regarding educational provision being much academic to become compatible with the requirements of employers and also neglecting supervisory and managerial skills. On the other hand, significant demographic changes in United Kingdom are also impacting recruitment practices, especially in the service sector.

The ratio of young people in the population is falling across the country. Increasing participation in education, in fact, means rates of economic activity particularly for the younger age groups are falling. For the purpose of offsetting the impacts of the demographic slump, more organizations are applying HR polices and practices focused at hiring from other groups also, such as women returners, mature workers, and possibly ethnic minorities that have been discriminated in the past against each other. (Freeman 2004)

Policies and Practices to Persuade Employers

These policies and practices within the human resource function facilitate employers in a positive way to persuade and obtain applications from groups mostly under-represented in their related workforces and other developments have also affected requirements of employers. The technological progresses have created a significant desire for systematic thinking, conceptual knowledge, and intellective skills, as well as teamwork instead of repetitive human handling. (Bryson 2005)

Moreover, the overall share of certain knowledge occupations- profession, managerial, and technical occupations- is continuously increasing. Employers in United Kingdom are continuously and increasingly selecting candidates having motivation, initiative, social skills, persistence and willingness as well as ability to learn. Even in such occupations in which academic qualification are considered as highly significant, they are regarded as more of a screening equipment- signaling individual and personal traits instead of acquired knowledge. (Layard 2006)

Due to the current market conditions, discussed above, in the UK labor market, the numbers of clerical and sales workers have significantly increased, and in response, have created a specific premium on some skills and features in the labor market. The recent emphasis particularly on the quality as a competitive advantage has ultimately led to the greater significance of customer service. Resultantly, interpersonal skills are regarded as one of the primary requirements while recruiting or hiring all kinds of jobs, but specifically those in the developing service industries. (Dickens 2002)

Policies and Practices for Skill Requirements

The phenomenon of globalization has not caused significant changes in overall talents and skills requirements with some exception of language skills. Disparity in the skill requirements by different employers are to be anticipated across occupations, industries and organizations. It is generally acknowledged that employers in UK are placing too much significance on the personal attitudes and qualities of the candidates than in qualifications and narrower skills. (Kirby 2005)

This element is creating more difficulties for the organizations as the primary features they require are most complex to measure objectively. In the meantime, the academic certificates and qualification achieved are only available for those accomplishments rated as being of low immediate relevance. (Bryson 2006)

One particular problem in the Human Resource policies and practices impacted by the UK labor market is the conflict of interest between employers having apprehensions this will ultimately make workers mobile and will then lead to increasing loss of costly trained staff. Most of the UK employers doubt that personal skills such as motivation, initiative or communication skills are completely developed only with the help of formal education and as such qualifications have become more significant display of ‘motivation to learn’ and learning capability’.

It is firmly believed that degree subject is still viewed as very important in a restricted number of areas like technology, computing and engineering. Technical skills, in these fields, are highly considered and they are also likely to be regarded as paramount in the future. Different studies have shown that employment in United Kingdom is experiencing considerable enhancements in works requiring people skills- empathy with others- decent interpersonal communication and a pleasant manner. (David 2003)

More than fifty percent of employees in the labor market of UK now deal with clients or customers and almost one in every five is present in different caring positions. More than a third in UK has jobs with degree of responsibility focusing on other people such as supervising or coordinating. Resultantly, UK employers are becoming increasingly aware of the significance of such social skills.

Recruitment in the UK Labor Market

UK labor market has commonly displayed higher average tenure in jobs and also lower rate of turnover compared especially with the United States. In the recent years, however, a fall in the average job tenure has been witnessed and much higher rate of labor mobility and turnover. As such there has been an overall increase in the activity of recruitment, which is also observed as a sign of the weakening of labor market in which recruitment of employees is made at a much earlier stage particularly for lifetime, progressing and moving ahead through internal promotion.

Consequently this could be a result of the decline in monolithic industries and the continuous increase in the significance of small and medium enterprises with much shorter average lifespan. This phenomenon also reflects the reduction in union influence and unionization which has transpired in many European countries including UK.

Unions have always confronted to implement hiring and firing rules supporting internal labor markets. In the UK labor market recruitment involves search by potential employees and employers. This type of search depends on formal and informal networks of information. Formal network comprises different recruitment channels like press and mass media, including Internet, the public employment services as well as different private employment agencies. (Ness 2006)

Conclusions and Recommendations

The paper has highlighted the UK labor market and how the current labor market conditions in UK impact the policies and practices within the human resource function. Since the world of work is swiftly altering, the rapid expanding evolving economies, new technology, and continuous increasingly international global market have a significant effect on the organizational structures and practices, productivity and growth of UK firms.

Some of the recommendations in this regard may include; for preventing individuals into long-term employments, active labor policies and practices should be designed and implemented to ensure that every person is offered training or work within almost a year of becoming unemployed; a system of corresponding rights and responsibilities are required in which the citizen can anticipate superior-quality support in finding work; policies and practices for reducing labor supply, for instance early retirement, should be phased out.

Reference List

Blanchflower, D, 2007,‘Change over time in Union Relative Wage Effects in the UK and the US Revisited’, International Handbook of Trade Unions.

Bryson, A, 2005, ‘Working off Welfare’, Social Policy: Issues and Developments, Pearson Education.

Bryson, A 2006 ‘Worker Voice, Managerial Response and Labor Productivity. An Empirical Investigation’. Industrial Relations Journal, vol. 37; n o.5, pp. 438-55.

David, A 2003 ‘The Skill content of Recent Technological Change’ Quarterly Journal of Economics, vol.118; no. 2, pp.1270-333.

David, A 2005, ‘Trends in US Wage Inequality. Re-Assessing the Revisionists’ Quarterly Journal of Economics, vol.118; no.4, pp. 1080-1100.

Dickens, R 2002 Whiter Poverty in Britain and the US: the Determinants of Changing Poverty and Whether Work Will Work, University of Chicago Press.

Dickens, R 2007 ;Has the National Minimum Wage Reduced UK Wage Inequality? Journal of the Royal Statistical Society Series, pp.613-26.

Driffield, N 2006, Global Competition and the Labor Market, Routledge.

Fernie, S 2007 Trade Unions: Resurgence or Demise? Routledge.

Freeman, R 2004 What have Two Decades of British Economic Reform Delivered? University of Chicago Press.

Jenkins, S 2004 Gender, Place and the Labor Market, Ashgate Publishing.

Kirby, S, 2005 ‘High-performance Practices, Trade Union Representation and Workplace Performance in Britain’, Scottish Journal of Political Economy, vol. 53; no.3, pp. 451-91.

Layard, R 2006, Unemployment: Macroeconomic Performance and the Labor Market, Oxford University Press.

Ness, I, 2006, Immigrants, Unions, and the New U.K. Labor Market, Temple University Press.

UK Unemployment. Labor Market Statistics. Web.

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