As an associate professor of economics and international affairs at George Washington University, Tara Sinclair’s expertise is in modelling, explaining and forecasting macroeconomic and labour market fluctuations and trends for different countries. As chief economist for Indeed, the global jobs search engine, she is able to develop original research using Indeed data on jobs and labour to help them provide the best possible information to its vast global network of job seekers and recruiters.
Speaking exclusively to HRreview’s James Marsh, she gives her reaction to the Budget, her verdict on the state of the UK labour market, and on the importance of speaking languages, from a global perspective…
With a general election on the horizon in May, to what extent is the UK economy reflective of global trends right now?
The UK does have some unique issues, but concern over lack of significant growth in wages and low inflation rates is being experienced globally. In real terms people all over the world are seeing small increases in wages but haven’t regained the ground they lost in the recession.
The US and the UK can certainly be said to be wrestling with variations on a theme, in terms of employment issues, but both have approached this challenge in differing ways. In the aftermath of the global recession, the US suffered proportionally larger employment losses than the UK, but were able to maintain levels of productivity better. The UK saw fewer employment losses, but this stagnated wage growth and has led to a drop in productivity. Both are now struggling with wages growth, but the UK, and UK businesses, have to focus on increasing the productivity of its workforce.
This month’s Budget from Chancellor George Osbourne contained a generally positive message for UK businesses, but there was concern from youth employment groups and recruiters, who believe the gap between education and employment is widening and that there is a worsening skills gap. Do you share these concerns?
I think the skills gap is something to be concerned about but it’s important to remember that, for higher skilled jobs, there is now global competition, and so the question of why there is such a persistent skills shortage is a global puzzle and not unique to the UK. Government can only do so much – it is crucial that employers invest in training for their staff to fill this skills shortage. Government-led and public education are a great platform for providing general work-place skills that can be applied to any job. Employers should look to provide the education and training required to help employees develop specific skills that are required within their company.
The current government has invested heavily in apprenticeships and announced further apprentice wage increase and employer incentives in the Budget. This is a step in the right direction, right?
Apprenticeships are certainly a good thing – less prevalent in the US but Germany is a great example of how they can be a success and the UK are following this model. The problem for public education is not just figuring out how to provide the skills the workforce needs now, but to try and focus on building the skills that the economy will need in the future – in thirty years’ time.
Last month the Low Pay Commission recommended that the national minimum wage (NMW) should rise by 3 percent to £6.70, which would be the largest increase in real terms since the recession. What impact could this have on the UK labour market?
The impact depends on the type of jobs we are talking about. Of course everyone on the minimum wage will really appreciate the increase and that will be great for them in the short term. For jobs with a low wage on entry but that have a ‘high trajectory’, with opportunities to progress and develop, a wage increase at that lower end is good news going forward too. The danger is that an NMW increase across the board can encourage people into low-trajectory or flat-growth jobs in which there is little chance to progress – and away from jobs with development opportunities.
Is this compounded by the fact that the global economy is becoming ever-more automated? Isn’t this likely to reduce the demand for lower-skilled workers?
Sure, automation has meant that there will be less demand for lower skilled labour and so it’s likely that some low-trajectory jobs will be lost in the future. For individuals who built their career plans based on types of work that are being replaced by automation and/or foreign workers, this is a difficult transition. However, automation also brings opportunities for new and different kinds of work that can be more rewarding in the long run and offer a greater career trajectory. The challenge is training these displaced workers in the skills required for these new roles.
If we look at the countries outside of the UK in which Britons are currently most likely to look for work, the vast majority of them are English speaking. Is this a sign that we are being held back by our traditional comparative lack of language skills?
Of course language skills can be an advantage and shouldn’t be discouraged, but English remains the language of business globally and so this isn’t something that is too concerning at present.