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Stuck in low pay – London’s hourglass economy

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While London has more jobs than ever before, London’s economy faces a unique set of challenges resulting from the loss of mid-skilled employment opportunities and slowing productivity gains.

The London Assembly Economy Committee today publishes its report ‘The Hourglass Economy: An analysis of London’s labour market’. The labour market has become ‘hollowed out’ with a 13 per cent decline in the proportion of mid-skilled jobs (skilled administrative, manufacturing and trade jobs), meaning fewer opportunities for progression out of low pay.

Productivity rates have grown at a slower rate than the rest of the UK, largely as a result of the skills shortage in London’s labour market. The proportion of jobs in London paying less than the London Living Wage has increased by 54 per cent since 2008, with one in five jobs in 2015 now paying less than the London Living Wage. The proportion of people employed on part-time and temporary contracts has increased from 25 per cent to 29 per cent since 2008. In-work poverty is rising: 57 per cent of Londoners in poverty are in working families. The report explores the state of London’s economy since the 2008 financial crisis. It makes a number of recommendations, including:

The next Mayor should continue to promote the London Living Wage, with an ambition for all large multinationals to pay the London Living Wage over the next two years. The next Mayor and the London Enterprise Panel should work to ensure that London’s apprenticeships programme better provides the skills needed for London’s key growth sectors.

The next Mayor should call for all job adverts to include contract and pay details to improve transparency and to encourage more firms to adopt fairer pay and conditions. The next Mayor should establish a working group to look at low pay sectors, such as retail and hospitality and to look at ways in which organisations can improve their contractual arrangements and working practices.

Fiona Twycross AM, Chair of the Economy Committee, said: “Despite the positive headline economic figures, for many who keep this city running, working conditions are tough with low-pay and insecure contracts. This report shows that since 2008 London has become increasingly polarised, with low pay, the erosion of mid-skilled jobs and a growing skills gap entrenching the inequalities in London’s labour market. As London’s economy sees growth, employers shouldn’t have to reduce hours, use zero hour contracts or freeze pay to protect jobs. We need stable, well-paid and good quality jobs in the capital. Londoners deserve to live and work securely, without fear of working poverty.”

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