Winners and losers in the 2011-12 jobs market

I’m slightly hesitant about naming anyone in my blog at the moment. Within days of mentioning Clive Dunn, the Dad’s Army actor died at the age of 91. Last week’s Dallas themed post was equally swiftly followed by the death of 81 year old Larry Hagman. The latter was most famous for playing the character JR Ewing, whose fictional close encounter with death a generation ago meant that “Who Shot JR?” for a short while usurped “Who Killed JFK?” as the question most associated with the Texan city. It was therefore somehow fitting that Mr Hagman passed away on November 23^rd, just one day after the 49^th anniversary of the assassination of the former United States president.

Back here at home 22 November saw the Office for National Statistics (ONS) release the latest Annual Survey of Hours and Earnings (ASHE). The results confirm the extent of the real pay squeeze between spring 2011 and 2012, with hourly median pay growth for full-time employees only around half the corresponding 3% rise in price inflation as measured by the Consumer Prices Index. But with the national minimum wage helping to support pay in the lower half of the earnings league, the top 10% of earners felt the biggest squeeze. The pay of full-time employees in the bottom tenth of the distribution increased by 2.3%, while pay for those in the top tenth fell by 0.2% (i.e. a real hourly pay cut of 3.2%).

My initial response to this was that although the pay gap between top, middle and low earners remains very wide in the UK and is still far wider than a generation ago, 2011-12 has as least turned out to be something of a ‘we’re all in it together’ year in Britain’s jobs market with pay at the top hit hardest by the double dip recession. However, I was also interested to see how pay growth between spring 2011 and 2012 compared with employment growth during roughly the same period (April-June in each year), as discussed in my blog posting of 12 November which listed the top 10 fastest growing occupations in the past year and the 10 occupations recording the biggest loss of employment.

Growing demand for certain types of labour might result in a combination of relatively strong growth in both employment and pay, or vice versa where demand is weak. But it’s also possible that faster or slower pay growth could help price some types of workers out of or into jobs, thereby causing pay and employment growth to diverge.   

Although the ASHE lists the number of jobs in each occupation as well as pay and hours these are considered indicative rather than accurate estimates, so it’s best to compare the ASHE results with the broadly corresponding Labour Force Survey employment estimates.

Listed according to their position in the Standard Occupational Classification (SOC) the 10 fastest growing occupations saw the following percentage change in median hourly earnings for full-time employees: Production Managers and Directors in Manufacturing (+1.1%), Human Resource Managers and Directors (+2.2%), Information Technology Specialist Managers (-0.5%),  Management Consultants and Business Analysts (-0.3%), Quality Assurance and Regulatory Professionals (-2.8%), Graphic Designers (+1.0%), Financial Accounts Managers (+0.7%), Credit Controllers (+0.5%), Chefs (+0.5%) and Sales and Retail Assistants (+1.9%).

The corresponding changes for the 10 occupations registering the biggest jobs losses are: Financial Managers and Directors (+0.2%), Chartered and Certified Accountants (+5.5%), Youth and Community Workers (-2.8%), Local Government Administrative Occupations (+0.8%), Typists and Related Keyboard Occupations (+1.8%),  Electricians and Electrical Fitters (+0.1%), Plumbers and Heating and Ventilating Engineers (-0.5%), Teaching Assistants (+2.5%), Nursing Auxiliaries (+1.4%), Security Guards and Related Occupations (+0.8).

Interestingly the only one of these 20 occupations to register a real hourly pay increase, Chartered and Certified Accountants, was one of the biggest job shedders (down 39,000 or 16.8% on the year), suggesting that this group was content to trade-off higher pay against jobs. The biggest losers are Youth and Community Workers, who suffered a 5.8% real hourly pay cut as well as shedding 25,000 jobs, a 30% reduction in numbers. Of the remainder, Human Resource Managers and Directors is the occupation that fares best (a modest hourly pay cut of 0.8%, alongside employment growth of 22,000, or 19.2%), indicating relatively strong demand for this group. Ironically, therefore, HR managers and directors, who are employed to deliver news about pay and job cuts to others in the workplace, have of late been keeping the best news for themselves.  

HR - more big hats, cattle no more engaged or productive

Talk about finding sixpence and losing a shilling. Just as I rejoiced at no longer having to watch archive footage of Jim’ll fix it!, while channel hopping I discover that an updated version of Dallas is on TV. Little has changed. Once again JR Ewing is dismissing a rival as being ‘big hat, no cattle’, talking a lot but lacking money, power and influence. This reminded me that the same phrase has often been used to deride the HR profession, so I decided to take a quick look at what’s been happening to the size of HR hats and what effect this might be having on the ‘cattle’ they're responsible for.

On the conventional Labour Force Survey measure just over 0.4 million people are currently (Q2 2012) employed in HR and development roles in the UK. This narrow figure encompasses HR directors, managers, trainers, and administrators. The figure doubles to around 0.8 million if payroll and wage clerks are added but people doing these jobs are often considered finance rather than HR staff.

The narrow HR total is 83,000 higher than in 2001. The number surged by almost 100,000 to a total of 450,000 in the boom years to 2008 before falling in the 2008-9 recession, settling at 432,000 in 2010. But the number has since recovered to 437,000 despite the 2011-12 recession and widespread back office job cuts in the public sector. Although occupational classifications changed in 2011 the effect of this on HR was simply to reclassify some HR director roles to HR managerial roles and to separate HR administrators into a specific occupational sub-category. This led to a sudden statistical drop of 28,000 between 2010 and 2011 in the number of senior HR staff and a corresponding jump in HR managers and administrators. However, the number of senior HR staff bounced back sharply between 2011 and 2012 with a 22,000 increase to a total of 136,000, 17,000 more than the equivalent figure in 2001.

The number of ‘big hat’ HR honchos is thus around 14% higher and the level of HR staff in general almost a quarter (23.5%) higher than in 2001.  The share of HR in total employment has likewise increased from 1.3% to 1.5%. This is great news for the HR profession but is also somewhat disconcerting. While HR employment has increased considerably in both absolute and relative terms in the past decade this hasn't had any discernible effect on outcome measures of things one might expect HR to have a positive influence on.

Surveys suggest that the average rate of what is now fashionably called ‘employee engagement’ has flat-lined in the UK since this began to be measured in the early 2000s. Growth in labour productivity meanwhile has, as we are constantly being told, been even more disappointing. It might be argued that things would have been even worse had we not created more HR jobs but on the face of things HR appears to have offered a smaller bang for the buck in recent years.

HR professionals rightly call upon organisations to adopt better people management practice in order to raise levels of employee engagement and boost productivity. But in doing so HR must also demonstrate that it is genuinely adding value to organisations and is not just a compliance or administrative function.  The UK has a lot more HR hats and a lot more big and high paid HR hats, yet the ‘cattle’ are no more engaged or more productive. Before the HR profession points the finger of blame about poor workplace performance it needs to explain why its own influence appears so ineffective          

Jobs schemes boost latest jobs figures

I’ve just been looking at the monthly labour market statistics data release from the Office for National Statistics, mostly covering the period July-September. On the face of things these are another good set of quarterly jobs figures with 100,000 more people in work and unemployment down by 49,000, although the 10,000 rise in JSA claimant unemployment in October takes away some of the shine as does very weak growth in average earnings. The annual rate of growth in regular pay (excluding bonuses) has dropped across all the major sector groupings, to just 1.9% on average, so still lagging price inflation. Employment may have become oddly decoupled from what’s happening in the wider economy but viewed in the full perspective of jobs, productivity and pay the UK labour market remains in a state of distress.   

The number of employees in employment has increased by 87,000 while self-employment has fallen by 11,000. Significantly more than a fifth (22,000) of the net increase in total employment and almost half the fall in unemployment is due to a big quarterly rise in the number of people employed on government supported employment and training schemes. Many of these will be core jobless young people not in full-time education targeted by measures such as the Youth Contract. The number of unemployed people aged 16-24 in the core jobless category fell by 65,000 on the quarter, compared with an increase of 17,000 in 16-24s looking for work while in full-time education. This suggests that help for the target group of core jobless may be substituting for jobs that would otherwise have been taken by those in education.

The high proportion of scheme supported jobs in total new jobs this quarter distorts the underlying trend in growth in full-time and part-time jobs. Even so, it’s good to see signs of increased working hours and at last a welcome fall of 11,000 in the number of people working part-time because they can’t find a full-time job. It would seem that the jobs story in the most recent quarter is not so much one of full-time vs. part time work as temporary as opposed to permanent work, with an increase to 0.65 million in the number of people working as temps because they can’t find permanent jobs.

Also welcome in these latest figures is a surprising quarterly reversal of the traditional north-south divide across the English regions, with the North East, North West, Yorkshire and Humberside and West Midlands easily outperforming London, the South East and the East Midlands both in terms of increased employment and lower unemployment. The South East labour market looks to have weakened markedly since the spring while in London the temporary boost provided by the Olympics appears to be on the wane.

What jobs are being created?

It’s been a remarkable year in Britain’s jobs market. A flat economy has added more than 500,000 net new jobs – an annual employment growth rate of around 2% that one would normally expect only in a period of strong growth in GDP. There has been much discussion of this puzzling outcome which, even more remarkably, has occurred alongside large scale public sector job cuts. Most comment has focused on self-employment and part-time employment which together account for the bulk of the increase. Yet relatively little attention has been given to the types of jobs that have been created, or for that matter lost, during the surprising jobs boom. I’ve therefore looked at what at present available Office for National Statistics (ONS) data reveal about employment change by occupation in the past year.  

Managerial and professional jobs dominate the top 10 positions in the league table of UK job growth between April-June 2011 and April-June 2012, with big gains for Production Managers and Directors in Manufacturing (up 33,000, 13%), Human Resource (HR) managers and Directors (up 22,000, 19.2%), Management Consultants and Business Analysts (up 18,000, 12.3%), Quality Assurance and Regulatory Professionals (up 18,000, 29.5%), and Information Technology (IT) Specialist Managers (up 18,000, 10.3%).  However, Sales and Retail Assistants saw the biggest jobs gains (up 77,000, +7.2%), while the number of Chefs in employment also increased substantially (up 27,000, 14.4%).

The majority of the 10 occupations registering the biggest jobs losses are outside the managerial and professional groups, with the impact of the recession and cuts in public expenditure apparent in falling employment of Electricians and Electrical Fitters (down 26,000, 9.3%), Plumbers and Heating and Ventilating Engineers (down 24,000, 12.6%), Nursing Auxiliaries (down 32,000, 10.6%), Teaching Assistants (down 25,000, 7.1%), Youth and Community Workers (down 25,000, 30%) and Local Government Administrative Occupations (down 18,000, 10.5%).  Other occupations shedding substantial numbers of jobs include Electrical Engineers (down 17,000 36.9%), Medical Practitioners (down 15,000, 6.2%), Special Needs Education Teaching Professionals (down 14,000, 19.7%), Further Education Teaching Professionals (down 13,000, 9.4%) and Police Officers below sergeant level (down 12,000, 6.9%).

From the available data I also estimate that 1 in 14 UK workers (2.1 million or 7.1% of all people in employment) are back office workers. Of these 0.7 million work in finance, 0.4 million in HR, 0.4 million in IT and 0.6 million in back office administration. The number of back office jobs increased by more than 100,000 (4.8%) between 2011 and 2012, in percentage terms more than double the net increase in total employment.      

This analysis overall shows that the recent ‘jobs boom’ is a mix of good news for some groups of workers but bad news for others. While the net job gain is most welcome, at a time of economic austerity and mounting social distress it’s obviously worrying that we are shedding so many front-line public sector jobs in areas like health, teaching, policing and youth and community support work.    

Moreover, in a period of falling labour productivity it’s also very puzzling to see so many back office jobs being created. HR managers and IT professionals may be important to our increasingly knowledge based and personalized service based economy but it’s nonetheless surprising to see a surge in back office jobs at this stage in the economic cycle.