City firms shake up UK jobs market but stalling change cuts off routes to higher pay

City firms are changing the landscape of the UK jobs market, reveals a fresh study released today.

Over the course of the last decade, the professional services sector underwent the biggest structural shake up of any other in the UK economy, according to the economic think tank the Resolution Foundation (the Foundation).

In the last decade, the professional services sector created 912,000 jobs, leaving its workforce 40 per cent larger than it was at the beginning of the 2010s.

The research suggests the City, where professional services jobs are highly concentrated, has built on its standing as an engine for job creation over the last decade.

It also demonstrates that Britain’s economy over the past 50 years has pivoted away from a reliance on manufacturing to provide jobs and generate output toward highly-skilled services based jobs.

“The most significant shift has been the fall, in absolute terms and as a share of jobs, of manufacturing, and the rise of several service sectors, including business services,” the Foundation said.

A combination of technical progression, autonimising hard-labour roles and globalisation has steered the UK economy away from manufacturing.

However, structural change in the UK jobs market that often pushes wages higher and presents opportunities for workers to progress their careers has stalled recently, the Foundation found.

Labour market “churn” generate fresh routes for more frequent job movers to progress their career if it prompts employers to hike starting pay or offer higher status roles to attract the best talent.

Job movers can typically demand a four per cent pay rise when they switch jobs compared to workers that stay put, the Foundation said.

Nye Cominetti, senior economist at the Foundation, said: “The labour market is often characterised as being in rapid flux, as robots replace workers, and well-paid factory work is replaced by low-paid, low-security gig economy jobs.” 

“But these claims are very wide of the mark.”

“The reality is that the pace of change has been slowing down, not speeding up. This has reduced the risk of people losing their jobs, but also limited opportunities for workers to move onwards and upwards.”