Good jobs for non-graduates

When it comes to jobs, quality matters as well as quantity. And a growing number of non-graduates are working in low-paid, dead-end jobs.

By adopting a sector-specific approach we highlight where the good jobs for non-graduates can be found and how we can encourage more to be created.

Non-graduates make up more than one half of the workforce and are more than twice as likely to be unemployed as graduates. However, the problem is not only the quantity, but also the quality of jobs available to them.

In the past three decades the UK has witnessed a growth in the proportion of precarious low-paid jobs on the one hand and high-paid graduate jobs on the other. The result has been growing in-work poverty and economic inequality.

The traditional policy response to this ​‘hour-glass’ labour market has been to try and up-skill the population, pushing as many people as possible into the top half of the glass. This is valuable but it is not enough.

To reshape the debate our research takes a fresh look at the data. We analyse the jobs available to non-graduates by sector to find out where the good jobs for non-graduates can be found now and where they may come from in future.

Key Findings

• The majority of the non-graduate workforce is employed in ten ​‘super sectors’ of which retail is by far the biggest employer.
• Wages for those with the same level of qualification vary hugely by sector. The least well paid make around £18,000 a year in transport manufacturing as opposed to under £10,000 in hospitality.
• The variations in sector pay levels are not explained by the variations in qualification profiles. Middle-level qualified workers in social care tend to be worse paid than low qualified workers in transport manufacturing.
• Around half of the super-sectors are forecast to grow. Unfortunately, these are the ones that pay the lowest wages.
• Sectors that offer a high proportion of good jobs are forecast to decline, affecting areas of the UK with higher unemployment the most.
• The best paid sectors are male-dominated, suggesting women are less likely to get a good job without a degree.

Conclusions

1. As things stand, the number of good jobs for non-graduates is set to fall. If policymakers do not act soon we will face a labour market that is even more hollowed out with an ever tighter squeeze in middle level jobs.
2. Up-skilling non-graduates is not enough on its own. The sector you work in as well as your skill level has a huge influence in determining your pay and progression.
3. Low pay is more prevalent in non-traded sectors. The lowest paid sectors are not for the most part competing internationally. So whilst British factory workers may be competing on wages with their Chinese counterparts, British gym instructors are not.
4. Based on existing patterns, manufacturing super sectors offer the best chance of tackling regional imbalances in unemployment. Manufacturing provides good jobs in areas where employment is lowest.

Recommendations

We need a jobs strategy that renovates the bad and promotes the good jobs in the economy. We argue for a sector-specific approach, developed in collaboration with businesses, employees, trade unions and educational institutions.

• In social care, an expanding low wage sector, government is the major employer and purchaser; it therefore has the power to gradually raise wages, in ways that incentivise higher quality care.
• In retail, a large low wage sector which is also not part of international supply chains, government should strengthen incentives and pressures for higher wages. This has to be done slowly but steadily to avoid unemployment and other negative side effects. Measures include uprating the minimum wage, adjusting fiscal incentives and taking steps to strengthen collective bargaining.
• In construction, a high wage sector where demand is highly sensitive to policy, government should use the planning system, the capital gains tax regime and creative public investment to stimulate construction of much needed social housing and the greening of existing stock.
• In manufacturing, a high wage but declining sector, government should stimulate demand by helping regions develop a clear sense of their actual and potential competitive advantages that can generate good jobs, given developments in the global economy.