4 March 2021
Last February, the Department of Education published their latest edition of Working Futures, this time giving us a look at what we can expect the UK labour market to look like by 2027. Deciding to revisit the report has been interesting.
It was written taking the UK’s long-awaited/long-dreaded (depending on your view) departure from the EU into consideration, but of course was published at a time when COVID-19 was not much more than a story from overseas.
The physically isolating nature of COVID has led to a fairly discriminate impact on the economy, with sectors that are heavily reliant on being able to welcome people into their premises being more fiercely hit than others. The thing that struck me most about the projections in the report was that a fair few of the conclusions drawn correlated with the way employment has been affected by COVID, with some exceptions of course.
Here are some of the conclusions from the report and thoughts on how this has been and may continue to be affected by the pandemic.
1. Conclusion: 'Continuing polarisation of employment but with a strong bias towards higher skilled occupations'
COVID impact: Throughout the pandemic, we have seen that those jobs labelled as ‘higher skilled’ have been the least impacted by lockdown, with low-wage occupations being hit the hardest. This is mainly due to the flexibility of roles being able to be carried out effectively from home1. Therefore, where some businesses have had to completely stall work, others have been able to continue working and developing with a bias towards higher-skilled occupations.
Job posting data, shared by data company Emsi, shows a difference can be seen between lockdowns in what sectors have been most affected. Some have been able to adapt to COVID restrictions by the later lockdowns, allowing for operations to continue, such as construction and building trades (see figure 1). Unfortunately, this has not been possible for all, many of which are service and middle-skilled roles. More of this in points 2 and 3.
2. Conclusion: 'The other main source of growth is expected to be Caring, leisure and other service roles, with more than 400,000 additional jobs'
COVID impact: As alluded to in the first point, service roles have been hit the hardest by the pandemic, including leisure but with the exception of caring roles which, unsurprisingly, have stayed in great demand during the pandemic. We would expect to see leisure and other service roles bounce back considerably at the end of lockdown, with many people looking forward to going out again, seeing people and spending money. We have seen an element of this on the easing of the first lockdown2. It will be a question of businesses within these sectors being able to survive until restrictions are lifted.
3. Conclusion: 'The largest source of net decline over the course of the decade is projected to be administrative and secretarial occupations, with 390,000 fewer jobs. Process, plant and machine operatives (-130,000) and skilled trades'
COVID impact: According to the job posting data from Emsi, administrative and secretarial and related professions have been heavily impacted by lockdowns 1, 2 and 3. These type of middle-skilled jobs are at higher risk of automation as projected in the Working Futures report. McKinsey3 posted some interesting findings that showed two-thirds of senior executives surveyed in July 2020 said that they were stepping up investment into automation and AI which will affect those jobs that mainly contain routine tasks, greatly impacting lower wage workers. Could it be possible that the furloughing of these jobs in the pandemic may see this transition happen sooner if companies have either learned or been forced to adapt without them?
4. Conclusion: 'The projections indicate that we will continue to see a shift towards more people holding more high level qualifications. By 2027, it is expected that 55.2% of jobs will be held by people qualified at Level 4 and above. The average qualification level held is expected to rise within all occupations. How much this is due to increasing skill requirements within jobs, as opposed to “qualifications inflation” (as supply has risen) is a matter of debate'
COVID impact: Despite the disruption COVID has caused to the important university experience, applications to universities for undergraduate study increased in 20204. This may be because young people are taking up the chance to gain higher qualifications as an alternative to entering a difficult labour market. Not COVID related, but the Department for Education has also recently published its white paper5 for post-16 technical education, giving people more options for studying to higher qualification levels in technical skills and not just academic, with the aim of meeting national skill demand.
For most of the report’s findings, it feels like perhaps COVID has not changed the direction of skill and market development. The future of work still seems to be one that will favour higher-skilled, higher-educated/qualified workers, with dependence on digital skills being even more prevalent. However, current research suggests the pandemic may have accelerated some of these projections. Homeworking is a prime example. Not commonly practised across the UK, now many companies are determined to keep homeworking as part of their employee offering and some are even getting rid of their city office blocks altogether3.
Figure 2 from McKinsey3 shows some interesting projections about the share of employment in a post-COVID world, especially when considering what’s been explored above. They estimate that more than half of displaced low-wage workers will need to upskill into higher paying jobs, potentially shifting occupations altogether, to remain employed.
University students and graduates may take some comfort in these findings, knowing that they’re already on track for higher-skilled occupations; however it will remain of great importance that students are graduating with the skills that meet demand of the labour market. This may now also include being able to effectively work from a home environment.
Working Futures 2017-2027: Labour market and skills projections report, available at GOV.UK
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