The Lost Generation That Hasn't Even Been Born
This article looks at the current issues facing young people in housing, the job market, education and social mobility in the UK to predict what this may hold for people being born today as they enter into an increasingly disruptive future.
Housing Opportunities For Young People
England is suffering a catastrophic housing crisis that has been more than a generation in the making. The number of new homes built each year is not nearly enough. To keep pace with demand we need around 245,000 homes per year but manage to build only around half of this.
The overall level of house building in the UK has declined since 1980, with 140,880 houses built in financial year 2013/14 — a fall of more than 44% from the 251,820 built in 1979/80. At current house building rates London will face a shortfall of over 700,000 homes by 2031.
Buying
According to PwC, those struggling to raise a deposit will continue to be thwarted by house price rises that outpace earnings growth. The price of the average house is set to increase by about £32k each year until 2020. The average UK home would be worth around £360,000 by 2020, compared with £279,000 in 2015.
It is increasingly difficult to get on the housing ladder, in 1991, 67% of the 25 to 34 age group were homeowners. By 2011/12, this had declined to 43%.
In 2012–2013, the median income before tax for people aged 20–24 is £14,500, for people aged 25–29 it is £19,300. The median price of a first time buyer property in the UK is £148,190 with a median deposit of £25,190.
Housing is becoming unaffordable for most people in normal jobs such as nurses, firefighters and plumbers. Only the wealthiest of the next generation will be able to buy a home if current trends continue as pay is not keeping up with the increase in house prices. The ratio of median house price to median earnings was 3.5 in 1997, this has risen to 6.7 in 2013.
House price increases have meant that first time buyers now need to save much larger deposits and borrow more, relative to their income. Research from the Council of Mortgage Lenders shows 71% of people born in 1970 were homeowners by the time they were 40, but among those born in 1990 the figure is likely to be just 47%.
Renting
A report from economists at accountancy firm PwC suggests the number of new homebuyers is set to fall over the next 10 years, as the high cost of raising a deposit locks large segments of society out of the housing market. By 2025, a quarter of all households will privately rent which means 7.2m households will be in rented accommodation compared to just 2.3m in 2001.
According to Shelter, one in five families in England now rents privately. Unlike renting in the social housing sector, most private rental properties are let out at market rates, meaning they are likely to be more expensive. They’re also likely to be let out on short term contracts of 6–12 months, with the landlord able to evict a tenant with only two month’s notice.
- Private renters are disproportionately represented in those who come to Shelter for housing advice
- Over a third of private rented homes fail to meet the Decent Homes Standard
- In 1 in 4 areas, rents increased by an average of £300 a year in 2012
- There were more than 85,000 complaints about rogue landlords in 2012.
On average, homeowners with a mortgage spend 20% of their income on paying that mortgage, however, private renters spend 40% of their income on rent. As younger people are significantly more likely to be affected by this imbalance this makes saving for a deposit harder. As more and more households are forced into private renting, increased demand will put greater pressure on the rental market. This will push up prices and drive down conditions — leaving renters even worse off.
Because of rising house and rent prices people are living further away from the city center and commuting in. Based on Census figures, the ONS calculated that the average distance travelled to work increased from 8.3 miles (13.4km) in 2001 to 9.32 miles (15km) in 2011. As well as longer journey times commuters can expect rising prices, a study by the TUC suggested regulated fare prices jumped 25% between 2010 and 2015, while average pay rose 9% over the same period.
Living With Parents
Younger people are finding themselves stuck living in their childhood bedrooms because paying high private rents make it almost impossible to save for a deposit. In 2013, over 3.3 million adults in the UK aged between 20 and 34 were living with a parent or parents. That is 26% of this age group. This means that the number of 20 to 34-year-olds living with their parents has increased by 669,000 (or 25%) since 1996.
Young men were more likely than young women to live with parents. For every 10 women, 17 men aged 20 to 34 lived with their parents in 2013. In 2013, 49% of 20 to 24-year-olds lived with their parents, compared to 42% in 2008.
The picture does look extremely bleak for young people trying to achieve what their parents or grandparents did, owning a secure home to raise their own family.
As well as impacting on day to-day living, high housing costs also increase the benefit bill. Increasingly, people’s earnings do not cover all living costs and so they need government assistance funded by the taxpayer. The proportion of those claiming housing benefit who are in employment has doubled from 11% in November 2008 to 22.5% in February 2014. The total housing benefit bill in England — accounting for inflation — has risen by almost 150% from £8.7bn to £21.5bn in 21 years.
This housing problem does not look likely to go away anytime soon with current lack of action from the government. The people who own houses will want to see them carry on rising. The PWC report says that 35% of homes will be owned outright, without a mortgage, by 2025. In 1995, just 24% of homes were owned outright.
FT: Foreigners buy nearly 75% of new homes in inner London — Foreigners bought almost three-quarters of the new homes sold in inner London last year.
More than half of all residences worth more than £1m are sold to foreign buyers. Some of the city’s most exclusive neighbourhoods go dark at the end of the social season, when wealthy residents return to their primary residences in Delhi, Moscow or Shanghai.
There are obvious solutions but neither government that has been in power recently seem to want to reduce this trend or try to even halt it, it’s not surprising when 25 percent of MPs are landlords compared to just 2 percent of the population. Recently, the Financial Times revealed that landlords increased their wealth by £434 billion in the last decade.
Employment Possibilities For Young People
Emerging employment models and technological change is set to disrupt work for many people in the future. Young workers who are generally low skilled, less experienced and less educated will be less able to adapt to a changing labour market and could end up struggling and suffering the most.
Changing Models of Employment
The future of work: Jobs and skills in 2030 from the UK Commission on Employment and Skills (UKCES) predicts the the way we work will be vastly within 15 years. This is what the UK’s future of work could look like in alternative scenarios;
1. Forced Flexibility — Greater business flexibility and incremental innovation lead to modest growth in the economy, but this flexibility often results in fewer opportunities and weakened job security for the low-skilled. “Employees will find themselves in an hourglass-shaped labour market. For highly skilled individuals, a progressive work environment allows for greater autonomy and a better balancing of work and family life. While the “squeezed middle” of the workforce sees jobs disappearing, low-skilled workers compete ferociously for positions (across all sectors).”
2. The Great Divide — Despite robust growth driven by strong high-tech industries, a two-tiered, divided society has emerged, reinforcing the divergence in the economic positions of the ‘haves’ and ‘have nots.’ “Employees experience new job opportunities due to the growth of companies providing high-tech goods. New jobs are also created in the higher value business and professional service industries that are linked to these new technologies. Positions for highly skilled workers come with a high degree of autonomy. Among the medium and low-skilled there is intense competition for poorly paid temporary positions, with limited career prospects, and a continued drop in demand for medium and low-skilled workers in manufacturing.”
3. Skills Activism — Technological innovation drives the automation of white-collar work and brings large-scale job losses and political pressure, leading to an extensive government-led skills programme. “Employees face long periods of unemployment, in particular those professionals made redundant by IT automation. Work is mainly project-based, with a high turnover of jobs, which can make the development of new skills more challenging.”
4. Innovation Adaptation — In a stagnant economy, improved productivity is achieved through rigorous implementation of ICT solutions. “Employees face relative insecurity of employment, many being forced to develop ongoing portfolios of project-based assignments with a variety of employers. Company-specific qualifications are often demanded as an entry ticket to jobs.”
The government study predicts that many changes could occur to employment within a short timeframe and low skilled workers may find these changes most challenging to transit to. It also found precarious employment with less employee benefits such as zero hour contracts could increase.
Forty percent of zero-hours workers earn less than £111 a week, the qualifying threshold for statutory sick pay, compared with 8.5% of permanent employees. The Office for National Statistics said the number of people reporting that they work on contracts without a minimum number of hours climbed to 744,000 from 624,000 in 2014, a rise of 19% to 2.4% of the total UK workforce of 31 million.
The ONS also found that 40% of those on such contracts wanted to work more hours than they were offered. A study published by the TUC in December showed that average weekly earnings for zero-hours workers were £188, compared with £479 for permanent workers. Of those working on zero-hours contracts 34% were aged 16 to 24.
A study by Deloitte found Canadian organizations are reaching out to the “open talent economy.” 47% of Canadian respondents plan to increase their use of contingent, outsourced, contract or part-time workers in the next three to five years. 80% view workforce capability as an important trend — and 53% see it as a long-term priority for their organization.”
“Traditional employment will no longer be the norm. replaced by contingent workers such as freelancers and part-time workers. The long-term trend of hiring contingent workers will continue to accelerate with more than 80% percent of large corporations planning to substantially increase their use of a flexible workforce.”
Jobs and skills in 2030:What trends shape the future of work? — As businesses shrink their workforces to a minimum using flexibly employed external service providers to cover shortfalls, a much smaller group of employees will be able to enjoy long-term contracts. “The idea of a single education, followed by a single career, finishing with a single pension is over”
Of the UK workforce, 14.7 per cent is now self-employed — the highest percentage since records began. The self-employed sector has grown to around 4.5 million, a 14.2 per cent increase compared with a 4.3 per cent increase in the number of employees. Anyone doing 1 hour or more a week of paid work is counted in the employment figures. Zero hour contracts can count, so someone who only works 5 hours a week can count as employed.
The employment rate is the proportion of people aged 16 to 64 in work. Right now there are not enough jobs for each person who wants to work. In early 2015 in the UK, about 1.3 million people were in part-time jobs when they wanted full-time work yet in 2015 there were only 743,000 job vacancies across the UK, there isn’t currently enough full jobs for the underemployed to get, nevermind the millions more classed as economically inactive or unemployed.
Almost a million young people are idle. In June 2015 there were 922,000 young people (aged from 16 to 24) in the UK who were Not in Education, Employment or Training (NEET).
The percentage of all young people in the UK who were NEET was 12.7%, down 0.3 percentage points from January to March 2015 and down 0.5 percentage points from a year earlier.
Just under half (47%) of all young people in the UK who were NEET were looking for work and available for work and therefore classified as unemployed. The remainder were either not looking for work and/or not available for work and therefore classified as economically inactive.
Another worrying trend for young people is the increase in underpaid internships to get onto the skills ladder and gain experience.
BBC: The new forever interns — “ The most recent 2014 unemployment rates for under-25s in Europe and the US shows a whopping 54% unemployment rate for those under 25 in Spain, 43% in Italy, nearly 24% in France, 18% in the UK and 12% in the US. As youth unemployment increased an entire generation saw internships replace a first job.
Lack of job security for young people has become a society-wide problem. Even in a country like France the number of internships shot up from 600,000 in 2006 to 1.6 million in 2012. “It’s become a way for young people to gain job experience, and it shouldn’t be,record rates of youth unemployment have been directly correlated with the rise of unpaid internships, which replace jobs and drive inequality, not only does the practice allow companies to get graduates’ skills on the cheap, it gives those who can afford to work for free an unfair advantage over their less well-off peers.” Perlin said in an email.
What is even more worrying for young workers is that this job experience is often pro bono: a 2013 EU report found that 59% of 18- to 35-year-olds across 27 EU member states hadn’t received any financial compensation for their most recent internship.
Four in ten interns still aren’t receiving the minimum wage, according to research released today by Monster.co.uk, which questioned over 200 young people in the UK who have completed an internship in the past 12 months. When questioning employers, the Monster study found that more than a fifth (22 per cent) of those who employ interns admit to paying them less than the minimum wage, despite the fact that the majority (84 per cent) claim to understand the law regarding this issue.
Young people from poorer families can be excluded from the opportunity to intern due to lack of financial assistance. According to a YouGov 2014 poll, interns in the UK don’t fare much better. Some 26% of UK companies pay either nothing or only expenses for interns, typically about £500 ($744). “It can cost up to £1,000 ($1,488) per month to do an unpaid internship in London,” said Ben Lyons, co-director of Intern Aware.
The number of NEETS, unpaid internships and zero hour contracts may increase in the future. Many employment benefits such as pensions that older generations enjoyed look to be eroded for this new generation of workers, that is if they can even find a job.
Young people who are low skilled, low experienced and low educated will find it harder to find work in the future as I believe, as well as many studies and experts predict that technological changes in the next 20 years will disrupt low skilled workers the most.
Technological Disruption
A 2014 Pew Report Some 1,896 experts responded to the following question: Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025?
It found these reasons to be concerned about it this time;
- Impacts from automation have thus far impacted mostly blue-collar employment; the coming wave of innovation threatens to upend white-collar work as well.
- Certain highly-skilled workers will succeed wildly in this new environment — but far more may be displaced into lower paying service industry jobs at best, or permanent unemployment at worst.
- Our educational system is not adequately preparing us for work of the future, and our political and economic institutions are poorly equipped to handle these hard choices.
Half of these experts (48%) envision a future in which robots and digital agents have displaced significant numbers of both blue- and white-collar workers — with many expressing concern that this will lead to vast increases in income inequality, masses of people who are effectively unemployable, and breakdowns in the social order. The fact they only asked within the next 10 years and almost 50% of experts are concerned is pretty alarming.
Other studies have looked into how advancing technology could affect jobs and found startling results, a study by Gartner predicts one in three US jobs will be converted to software, robots and smart machines by 2025. “Cognitive capability in software will extend to other areas, including financial analysis, medical diagnostics and data analytic jobs of all sorts. Knowledge work will be automated, new digital businesses require less labor; machines will be make sense of data faster than humans can.” says Gartner.
Deloitte, the Big Four accountancy firm, and the University of Oxford found that 35% of existing UK jobs at high risk of replacement in next twenty years, and that lower-paid jobs over five times more likely to be replaced than higher-paid. Digital, management and creative skills may become more important to employers in the near future, rather than things like repetitive processing, clerical services, and support services, the study found.
The report shows that office and administrative support, sales and services, and transportation are among the key sectors where jobs could be put at risk in the next 20 years or so. Angus Knowles-Cutler, London senior partner at Deloitte, said: “Unless these changes coming in the next two decades are fully understood and anticipated by businesses, policy makers and educators, there will be a risk of avoidable unemployment and under-employment. A widening gap between ‘haves’ and ‘have nots’ is also a risk as lower skill jobs continue to disappear.”
An analysis from the Committee of Economic Development of Australia warns more than five million jobs, almost 40% of jobs, could disappear in the next 10 to 15 years because of technological advancements, it found that technology is set to wipe out 60 per cent of rural jobs.
Another report in Australia found around 70% of young Australians are getting their first job in roles that will either look very different or be completely lost in the next 10 to 15 years due to automation. Nearly 60% of Australian students (70% in VET) are currently studying or training for occupations where at least two thirds of jobs will be automated. It found tomorrow’s young people risk losing the opportunity to gain crucial work experience, employability skills and entry-level roles in the labour force.
Foundation for Young Australians: The New Work Order — Young people are likely to be disproportionately hurt by automation. Young people tend to get their break into the labour market, or their first few jobs, like retail, admin, and laboring. These early work experiences and junior roles often help young people ‘learn to work’.
These fields are highly exposed to the impact of technology and are forecast to be highly affected by automation. Economists have forecast that jobs like checkout operators, receptions, personal assistants and fast food workers will either be lost or radically changed by technology.
By contrast, young people tend not to get their foothold in the workforce in occupations that are less exposed to automation, such as managers and professionals. Less than 20% of young people are employed in these more secure occupations.
Bill Gates — “Software substitution, whether it’s for drivers or waiters or nurses … it’s progressing, technology over time will reduce demand for jobs,particularly at the lower end of skill set. 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”
Mark Zuckerberg — “I think 10 years from now computers will be better than humans at reading, listening, talking, and other things. So we are developing this.”
Larry Page — “You can’t wish away these things from happening, they are going to happen, You’re going to have some very amazing capabilities in the economy. When we have computers that can do more and more jobs, it’s going to change how we think about work. There’s no way around that. You can’t wish it away.”
Think of these Fetch robots combined with Self driving cars in 20 years time and how they will disrupt jobs in physical retail and logistics. The retail industry employs 2.77 million people in the UK, it is the UK’s largest private sector employer. A third of all those who work in the retail sector are below the age of 25 (the whole economy average is 25%). The Logistics is the UK’s fifth biggest industry employing more than 2 million people across 65,000 organisations.
Just these 2 examples of advanced mobile robotics can cause huge amounts of disruption because businesses and startups will utilise autonomous vehicles and stock picker/placer robots for factories instantly as they will see the potential to out-compete rivals and increase profits by being able to deliver items safely, quickly and more convenient times at lower costs.
A new report was carried out by Oxford Economics and reveals that replacing members of staff incurs significant recruitment costs(£30,614 per employee). The report analysed the cost implication of staff turnover in five different sectors: Retail, Legal, Accountancy, Media & Advertising and IT & Tech.
The University of Oxford looked at how computerization will affect jobs in the US. They found that 70% if low skilled jobs are at high risk of automation. According to the report, The Future of Employment, the Oxford professors found that Accountants and Auditors have a 94%, Retail Salesperson 92% and Cashiers have a 97% probability of being automated within 20 years.
When a company has to make a decision between an upfront cost to hire a new accountant(~£30k) + wages or cheaper software, which will make more financial sense to shareholders? It is in the interest of every capitalist company to employ a minimum number of workers, pay them a minimum salary and have the highest productivity to maximise profits.
Andrew Ng ( Chief Scientist at Baidu Research) — “I do think there’s a significant risk of technological unemployment over the next few decades, many people are doing routine, repetitive jobs. Unfortunately, technology is especially good at automating routine, repetitive work. It’s also not just about full automation. For example, if 50 percent of a radiologist’s job can be automated, this will put pricing pressure on their salaries.”
Higher skilled people may have to take lower skilled jobs as a result of disruption. Many low skilled people will struggle to compete with displaced higher skilled workers, outsourcing and machines which will work 24/7, every day of the year with no breaks, holidays, sick days, lateness, distractions, tiredness, hangovers, complaints, strikes, wage rises, overtime pay, training or retraining, compensation, insurance, severance pay, contract negotiations, bonuses, maternity leave, law suits or pensions.
Martin Ford it is certainly correct that technology creates new types of jobs and also constantly changes the mix of skills required to perform those jobs. The question is whether progress will create enough new positions to absorb the victims of automation — and whether these new jobs will be accessible to people with average capability.
Despite all the hype about entirely new types of work that would have been unimaginable to previous generations, the reality is that the vast majority of our workforce is employed in traditional occupations. The most common occupations in the US are salesperson, cashier, food and beverage server, office clerk and driver. Indeed, one recent analysis found that about 90% of the US workforce is employed in occupations that existed 100 years ago.
If not enough new jobs are not created at the rate of disruption, many people could find themselves unable to find work. The market system is dependent on customers, and if large numbers of consumers (perhaps even a majority) are without any means to purchase goods and services, the market economy cannot succeed.
Your taxes may go up as a consequence, public services be reduced and in the worst case scenario it could cause another recession. The mantra “My jobs safe, it can’t be automated, I‘ll be ok’ is very short sighted. Even Billionaire CEO’s are worrying about this. Technology will disrupt almost all sectors of the economy. I discuss technological disruption and how it will affect jobs in much more detail in the article below: Exponential Job Disruption.
Jeremy Howard — “So we now know that computers can learn, and computers can learn to do things that we actually sometimes don’t know how to do ourselves, or maybe can do them better than us.
So I’m very excited about the opportunities. I’m also concerned about the problems. The problem here is that every area in blue on this map is somewhere where services are over 80 percent of employment. What are services? These are services.
These are also the exact things that computers have just learned how to do. So 80 percent of the world’s employment in the developed world is stuff that computers have just learned how to do.
What does that mean? ‘Well, it’ll be fine. They’ll be replaced by other jobs. For example, there will be more jobs for data scientists.’…Well, not really. It doesn’t take data scientists very long to build these things. For example, these four algorithms were all built by the same guy. So if you think, oh, it’s all happened before, we’ve seen the results in the past of when new things come along and they get replaced by new jobs, what are these new jobs going to be? It’s very hard for us to estimate this, because human performance grows at this gradual rate, but we now have a system, deep learning, that we know actually grows in capability exponentially.
And we’re here. So currently, we see the things around us and we say, “Oh, computers are still pretty dumb.” Right? But in five years’ time, computers will be off this chart. So we need to be starting to think about this capability right now. ‘Well, computers can’t really think, they don’t emote, they don’t understand poetry, we don’t really understand how they work.’ So what? Computers right now can do the things that humans spend most of their time being paid to do. If economists are going to claim that there will be new industries which require human input, I think they need to explain exactly what the human will be doing, and why the computer would not be able to do it at least as well.
Education
Technological growth, and the accompanying changes in business models will make the continuous adaptation of skill sets absolutely fundamental for successful participation in the labour market yet gaining an entirely new skill is currently very expensive.
The data, published by the Office for Fair Access (OFFA), show that 130 out of 172 universities and colleges, 76 per cent, will charge £9,000 for at least one course in 2015–16. At 44 universities, including Russell Group members Oxford, Cambridge, Manchester and York, all courses cost the maximum.
If you move out you will need maintenance loans to cover rent and other cost. A maintenance loan of up to £8,000 in London or £5,500 outside the capital is available to students for help with living costs. Rising rent is making it more financially difficult for many students. Currently, students from families with annual incomes of £25,000 can get an extra loan of £3,387 a year to help with finance.
So for a years study(if you are poor and study in london) you are looking at roughly £9k course fee + £8k maintenance loan + £3k extra maintenance loan which is roughly £20,000 a year. So if you fail or don’t like your course in your 1st year that’s how much it could cost you. At 18 thats a lot of pressure to make and a possible huge financial repercussions if the wrong decision is made.
Universities with “high-quality teaching” will be allowed to raise tuition fees in line with inflation from 2017–18, George Osborne has announced. So poor students studying in London can expect to leave uni with over £60,000 of debt if they study a 3 year course, which is set to increase even more in a few years. Yet all this debt may not be worth it at the end for some graduates.
The majority of UK university graduates are working in jobs that do not require a degree, with over-qualification at “saturation point”, a report claims. Overall, 58.8% of graduates are in jobs deemed to be non-graduate roles, according to the Chartered Institute of Personnel and Development. It said the number of graduates had now “significantly outstripped” the creation of high-skilled jobs. One in five graduates are earning less than the average for someone educated to A-level standard according to figures published by the ONS in 2011.
Referring to the previous section about software and robotic automation effects on jobs, many people say new jobs are created in this area, which is true, but they neglect the higher skill needed to perform these jobs and are naive if they think workers such as truck drivers can simply become computer vision experts for driverless trucks. How will they provide for their families and pay bills such as mortgages? Gaining an entirely new skill set isn’t easy, even if it was possible for many, does getting into £60,000 worth of debt at age 56(the average age of a UK truck driver is 53) seem like a good idea?
Not everyone has the motivation, ability or opportunity to study and gain these skills “programming, designing and maintaining the robots”. First year engineering, maths and computing students are more likely to drop out than their counterparts in other faculties according to a report released by the influential Public Accounts Committee of MPs in 2008.
The subject with the highest dropout rate in the UK is Computer science. If you have the ability to gain a degree in computer science it is also difficult to find a job. Computer Science students have highest unemployment levels of all subjects. The Hesa figures show that 12.9% of recent computer science graduates are unemployed.
The Vocational Training Organisation reported that 74% of employers in the digital, IT and information services industry claim to be facing a skills crisis. It also revealed that almost half of digital companies are considering looking abroad for potential candidates. Of these, 61% feel the need to look abroad because young people in the UK are leaving education without the right skills needed for the sector.
How is there a digital skills crisis if 12.9% of computer science graduates are unemployed, why is investment not being put into training them instead of looking abroad? I believe it’s because companies no longer wish to train employees and graduates and want workers they can pay less. This global competition between medium and high skilled worker will increase due to a globally educated workforce soon to enter the labour market.
There is a global race for STEM skills and other countries are heavily investing and increasing the supply of STEM students, 41% of all degrees awarded by Chinese institutions in 2011 were in a STEM subject, almost twice the proportion of STEM degrees awarded in the UK and three times the rate in the US. China now stands behind only the United States in the number of science and technology journals published annually, and is expected to overtake the US in scientific output within few years, according to a recent study by the Royal Society.
The Future Of Work 2030 — The shrinking middle will challenge the workforce. The high-skilled minority (characterised by their creativity, analytical and problem solving capabilities and communication skills) will have strong bargaining power in the labour market, whilst the low-skilled will bear the brunt of the drive for flexibility and cost reduction, resulting in growing inequality.
Jobs which have traditionally occupied the middle of the skills hierarchy and earnings range, such as white collar administrative roles and skilled / semi-skilled blue collar roles, are declining at a significant rate due to changes in work organisation driven by technology and globalisation.
If current trends continue, within the next decade China and India will account for 40 per cent of all young people with a degree in G20 and OECD countries, while the United States and European Union countries will account for just over a quarter. With Asia projected to account for about 60 per cent of global middle class consumption in 2030, the continent promises high growth and profitable investment opportunities along with a strong and growing workforce. This may mean further off-shoring and outsourcing of jobs for the UK. It will certainly mean more intense international competition for its businesses.
A relatively highly educated workforce has been a traditional source of advantage, however, the rapid rise in global education means this historic strength is being eroded, the increasing numbers of highly educated people in the world will inevitably increase the international competition for the goods and services they produce. Individuals must acquire special skills to stay competitive, as even a high-end skill set is becoming more and more available elsewhere in the world.
If more middle and high skilled work is outsourced and automated, high skilled workers may have to take jobs which don’t require high skills, pushing people such as the 6m low educated with no qualifications or low experienced young people out of the labour force completely. It will also make it even more difficult for older NEETs to join the labour force.
The credo of the politician today is: “Why are you not hiring more people here?” The credo of the C.E.O. today is: “You only hire someone — anywhere — if you absolutely have to,” if a smarter machine, robot or computer program is not available. Yes, this is a simplification, but the trend is accurate. The trend is that for more and more jobs, average is over. Thanks to the merger of, and advances in, globalization and the information technology revolution, every boss now has cheaper, easier access to more above-average software, automation, robotics, cheap labor and cheap genius than ever before. So just doing a job in an average way will not return an average lifestyle any longer. — Thomas L. Friedman
Social Mobility and Social Complications
The population aged 65 and over is projected to increase by 42 per cent in the period to 2030, whilst the population aged 16–64 is expected to grow by only three per cent. According to projections, there will be an additional 5½ million elderly people in 20 years time, equivalent to an increased cost of £50bn per year in pensions and benefits. Currently 1 in 10 people in England and Wales provide unpaid care.
FT: UK pensions: tough choices as ‘old age support ratio’ shrinks — By 2050, the proportion of the UK population aged 65 and over is projected to reach nearly a quarter at 24 per cent, up from 17 per cent in 2012, according to the ONS. Strikingly, the fastest increases will be among the “oldest old”, with the proportion aged 85 and over forecast to treble from 2 per cent to 6 per cent.
Academics say these rapidly evolving demographic changes will affect everyone in society, regardless of age. The number of working age people to every pensioner, or the “old age support ratio”, is forecast to fall to 2.9 by 2050, from 3.3 in the mid-1970s to 2006.
“At worst, not only could it imply rising poverty, poor health and the erosion of social care for those in old age over the coming decades, but also lower standards of living for all of us, as ageing acts as a drag on economic growth and the future delivery of public services,” says David Sinclair, director of the International Longevity Centre UK, a think-tank. “Tax revenue from those in work may fail to keep up with demand for social security and healthcare from an increasingly large proportion of people aged over 65 and out of work and who have poor health, this will force governments to make tough choices.”
Older workers are also more prominent in the labour force which could make it more difficult for young people to get onto the skills ladder. A job is the most pressing requirement but many of those are now going to older workers. The over-50s accounted for 93% of the job increases over the last decade, according to analysis by investment bank Citi.
Low skilled young people will face the most difficulty finding work due to technological disruption and become NEET as they are pushed out of the labour force and become inactive or unemployed, possibly at similar levels to Greece or Spain(In June 2015, the seasonally adjusted youth unemployment rate in Spain was at 49.2 percent and 53.7 percent in Greece).
That could put even more strain on working people who now find themselves supporting many young adults and old adults. Social conflicts and division may emerge with working people struggling financially and seeing jobless people as “lazy moochers” and so on.
Young men could be the worst affected by employment changes in the future as men will be more likely to have low skills, less work experience and poor education. They will find it most difficult to adapt to new jobs and changes to employment in the future.
Women will be able to fare better in this disruptive job market. The role of women in the UK labour market will continue to grow in scale and importance. Full-time women are paid on average slightly more than men between the ages of 22 and 39.
By the main January deadline for those applying for courses starting in 2014–15, 333,700 women had applied to university through Ucas, compared with just 246,300 men. In England, women aged 18 were a third more likely to apply to university than men, the figures revealed and 57% is the proportion of first degree graduates that are women. Projections suggest that over the next decade women will take two thirds of net growth in higher-skilled jobs.
Many young men with lower incomes compared to females or stuck living at home may seem less desirable to potential partners. They may struggle to afford a house to start a family and get married. The average wedding now costs more than £18,000 and that doesn't even include the cost of an engagement ring which the male is expected to purchase.
Males may struggle to be the main provider like previous generations yet culture and gender expectations may change. Today’s generation of brides, born between 1976 and 1981, is for the first time more likely to “marry down” than “marry up”. While the majority, 56 per cent, marry in the same class, those choosing a spouse from a lower social class account for 28 per cent, while only 16 per cent of women are marrying men from higher social backgrounds.
The cost of sending a child under two to nursery part-time (25 hours) is now £115.45 per week in Britain, or £6,003 per year, which is a 5.1 per cent rise since 2014. In the past a single wage could provide for a family but nowadays even 2 wages can not be enough. Nearly two-thirds of British children in poverty live in working families, the Institute for Fiscal Studies has revealed in its annual poverty and inequality report, undermining government assertions that a job was an automatic route out of poverty.
With housing prices increases, more parents both working, child care increasing and job security decreasing it is becoming financially more difficult to start families for many young people. First-time mothers are older than ever before, at just over 28 years old. To make matters even more difficult, women will become “the breadwinner” in the future but men staying at home to look after children is not evident in current data.
Foundation for Young Australians: The New Work Order — “While our unemployment rate may be low, our factory floor workers have not seamlessly switched their hard hats for a healthcare job. Instead, unskilled workers, especially men, have stepped out of the labour force on mass. Over the past 25 years, nearly one in ten unskilled men lost their jobs and did not return to the labour force. Today, more than one in four unskilled men don’t participate. Big economic shifts are not costless for everyone.”
Other social difficulties facing young people with the decreasing value of low skilled labour in the future is the fact that 41% of non graduates aged 21 to 30 have dependent children compared to only 9% of recent graduates. They may find it difficult to adapt quickly and find employment in good paying jobs or any job, leading to increases in child poverty.
The UK has the highest rate of under 17 year olds living in households with income less than 50% the national median in Western Europe. Of all the Organisation for Economic Co-operation and Development (OECD) group countries surveyed by the United Nations for their 2011 report on child wellbeing the UK came bottom, below Hungary, Poland, the US and virtually every European or Western Nation. A child growing up in a poor family in Denmark has three times the chance of doing better than his/her parents than a child growing up in Britain.
UK Youth Poverty Statistics — The Households Below Average Income figures from 2011–12 recently reported that 2.6 million children (16 and under) were living in absolute poverty. This represents a rise of 300,000 since 2010–11 and is over a quarter (27%) of the child population.
Further according to the Living Standards, Poverty and Inequality in the UK report the incomes of young adults have started to fall behind those of the rest of the population, among people in their 20s median incomes fell by 12% between 2007 and 2012 (allowing for inflation).
The vast majority of reports suggest that young adults have been the worst hit by the recession. Meaning the group that grow up in the 27% of in poverty households and are then entering into young adulthood now face double the difficulties keeping them in poverty.
Increasing amounts of children being born into poor families is a big issue due to the lack of social mobility in the UK. A study of social mobility in the UK based on those born in 1970 found that if you were born with a father with an income in the bottom 10 per cent of earners you only had a six per cent chance of making it to the top 10 per cent of income earners.
Education is an engine of social mobility but achievement is not balanced fairly. For the poorest fifth in society, 46% have mothers with no qualifications at all, for the richest it’s only 3%. The proportion of young full-time undergraduate entrants to Russell Group universities who are from less advantaged social backgrounds was nineteen percent in 2011/12 . This compares to just under thirty-three percent for all universities in the UK in 2013/14.
Britain’s elite: formed on the playing fields of independent schools; 71 per cent of senior judges, 62 per cent of senior armed forces officers, 55 per cent of Permanent Secretaries, 53 per cent of senior diplomats, 50 per cent of members of the House of Lords, 45 per cent of public body chairs, 44 per cent of the Sunday Times Rich List,
43 per cent of newspaper columnists, 36 per cent of the Cabinet, 35 per cent of the national rugby team, 33 per cent of MPs, 33 per cent of the England cricket team, 26 per cent of BBC executives and 22 per cent of the Shadow Cabinet attended independent schools — compared to 7 per cent of the public as a whole.
Less able, better-off kids are 35% more likely to become high earners than bright poor kids. The research concludes that better-off, middle-class parents are successful in effectively creating a ‘glass floor’ which protects their children from downward mobility and makes it harder for able children from less advantaged backgrounds to succeed.
If you are born poor you will likely stay poor. You will struggle more to get into a good university or any university, 49% of the poorest will apply to university and get in, compared to 77% of the richest. You will also struggle to get onto the housing ladder, two thirds of first-time buyers receive financial help from parents — a figure that has doubled in five years. If current trends continue the only way to get a good education, good paying job and own your own home will be not to be born into a poor family.
Conclusion and Solutions
The future of employment for a child born today looks quite bleak but it doesn't have to be. Everything is down to a failing system and government policies not correcting it. I wish to emphasise that the section on “robots taking jobs”, the robots are not the problem. Instead the issue is the current government policies that are not ready to handle this disruption and spread the added wealth and prosperity the robots will create more equally.
Income and Wealth are rising in the UK, but only for minor few;
- Since 2009 executive pay has soared and the number of billionaires in the UK has doubled, while food bank use has increased from 29,000 users to nearly 1 million and the average worker has experienced a 9% real terms pay cut.
- Since the mid 1990s the incomes of the top 0.1 per cent have grown almost four times faster than the incomes of the bottom 90 per cent of the population. In real terms, that means the richest 0.1 per cent have seen their income grow by more than £461 a week, the equivalent of over £24,000 a year. By contrast the bottom 90 per cent have experienced a real-terms increase of £2.82 a week, equivalent to just £147 a year.
- Andy Haldane, chief economist at the Bank of England, reported real wages have fallen by around 10% from their pre-recession peak. This represents a fall in living standards that is unprecedented since the middle of the 19th century.
- The richest 1% of the UK population have as much wealth as the poorest 55% combined
- Almost one third of wealth in the UK is inherited, not earned. Only 13% of people receive any real inheritance(over £2000).
- The five richest families in the UK are now wealthier than the bottom 20 per cent of the entire population. That means just five households have more money than 12.6 million people put together.
- The UK has more billionaires per head of population than any other country.
The west’s leading economic think-tank dismissed the concept of trickle-down economics as it found that the UK economy would have been more than 20% bigger had the gap between rich and poor not widened since the 1980s.
Gov: Future Of Work 2030 — Between 2003 and 2008 wages for the bottom half of earners were flat whilst at the same time the UK economy grew by 11 per cent. According to some forecasts, real wages are not expected to return to their peak level (2009) until the next decade. The path to 2030 is likely to see a further real-terms reduction of household incomes whilst inequality between households and regions in the UK becomes more marked. If recent UK trends continue, the proportion of national income accounted for by the highest 0.1 per cent of earners will increase from 5 per cent to 14 per cent by 2030.
This can all be changed with government policy, with an increase in worker democracy such as Worker Co-op’s and Unions, the majority of people can earn more allowing them to enjoy more leisure time which will free up more work for the unemployed to perform. A way for people to adapt their skills to at any age is achievable by revolutionising Education using AI teachers, this will allow anyone to have the world's best education for free. Culture change on how we treat the most vulnerable will need to shift from vilifying into compassion and empathy as many people may struggle with the transition in this new disruptive labour market. Adequate safety nets such as a basic income guarantee can allow this so people can safely gain new skills.
I am optimistic because the policies would not be too difficult to enforce but pessimistic because I doubt a party can get in that will enforce them due to the undemocratic first past the post voting system which may be a very difficult obstacle to overcome. If they do get in it will be due to mass amounts of suffering which I would rather prevent from happening at all. I discuss the solutions in more detail in the article: Preventive Luddism.
