Despite the rigours of Thatcherism and the demands of globalisation, Simon Burgess finds that jobs last just as long as they did 20 years ago
The question of job insecurity is much in the news. Commentators have heralded an end to jobs-for-life, describing a much more uncertain working life for this and future generations. We are warned to expect a succession of dead-end jobs and a consequent increase in our feelings of insecurity. The twin culprits alleged to lie behind this transformation are the expansion of competition (globalisation) and the pervasive presence of information technology.
How long do jobs typically last in Britain? The answer is that there is a huge range. Some jobs last a matter of days, some literally last a working lifetime. Using data for 1990, Hedley Rees and I have estimated that the average length of a job is about 12 years for women and 18 years for men - suggesting that there is still a large element of stability in the UK labour market. While 24 per cent of men's jobs finished in less than five years, over 40 per cent lasted more than 20 years and 24 per cent over 30 years. For women, the corresponding figures are 41 per cent, 18 per cent and 12 per cent.
A common argument is that the proportion of workers in short-term jobs has increased hugely in the past 20 years or so, and that the proportion in long-term jobs has fallen correspondingly. In fact, the data show that this is not the case. Job tenure was the same for women in the early 1990s as it was in 1975; for men it had fallen by about one year. The proportion of workers in their jobs for less than a year was the same in 1992 as in 1975. The fraction in jobs for more than five years was lower in the 1990s for men (though not for women) than in the 1970s, but not dramatically so.
Our recent analysis has shown that sub-dividing the data to study particular groups defined by age, education level, occupation, industry and region does not overturn our broad conclusion, although there is a more obvious decline in job tenure for low-earning men, mirroring their poor showing in earnings growth comparisons.
So why is there this discrepancy between the facts on job tenure and the widespread public concern over job insecurity? One explanation is that media folk have been feeling insecure and have transmitted that fear to the rest of us. Another possibility is that individuals on temporary contracts, or with less formal job protection, may feel insecure even if their contracts are generally renewed, as the data suggest. Finally, individuals feeling worried about their jobs may take actions to offset the perceived threats. Their insecurity may reveal itself in longer working hours, lower wage claims and the like, all of which may counteract the forces of trade and technology to produce stable job tenure outcomes. The fact is that jobs last about as long now as they have done for the past 20 years.
The public debate suggests that from an individual's viewpoint, the longer a job lasts the better. A high chance of remaining in the same job for a long time clearly reduces your risk of unemployment. From the viewpoint of the economy as a whole, the argument is much less clear. What matters above all for a country in the medium and long run is aggregate productivity growth. Job tenure affects this in two ways. First, long job tenures are conducive to training and provide the right environment for appropriate work incentives. But, secondly, modern economies are continually buffeted by shocks - changes in tastes, the arrival of new products and production techniques - and short job tenures facilitate the rapid reallocation of workers from suddenly less productive to more productive businesses. Depending on their circumstances, different countries will find a different optimal portfolio of long and short-term jobs.
With Lia Pacelli and Hedley Rees I have also carried out research comparing the length of jobs in Britain and Italy. Despite very different labour market regulations and institutions, we found little difference in job tenure; indeed, if anything, jobs appear to last slightly longer in the less regulated British labour market.
Our research suggests that fears of a dramatic change in the nature of work, and the emergence of a new industrial peasantry are overdone. The world could change tomorrow, but there is no evidence that it is about to. Reports of the death of jobs for life appear grossly exaggerated.
Simon Burgess is at the Centre for Economic Performance, University of Bristol.