DPU Working Paper - No. 205

By Steffan Willis

ISSN 1474-3280

Technological change is having significant impacts on the UK’s labour market and low skill workers in particular. This paper constructs a framework linking the capabilities of technologies to changes in the occupational structure of the labour market, arguing that technologies which substitute for low skill labour weaken the bargaining position of workers relative to employers. The framework draws upon two hitherto distinct bodies of work namely, that of a labour economics literature on skills-biased technological change and the literature around precarious employment which links labour market flexibility to individual labour market outcomes.

This framework is used to analyse the impact of technological change on low skill workers through the lens of precarious employment. The paper adopts a two-stage analytical approach. Using data from the Labour Force Survey the paper finds evidence of increasing levels of precarious employment amongst low skill workers. This is combined with a qualitative assessment of the current labour market policy concluding that workers possessing basic levels of education and skills no longer command sufficient bargaining power to ensure high wages and secure employment and that existing government policies do little to enable low skill workers impacted by technological change to develop the skills needed to be competitive in the contemporary labour market. The paper concludes with a discussion of potential policy responses.

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Photo credit: Neil Schofield (2019). Gig Economy. Licensed under creative commons (CC BY-NC 2.0). Available at: https://www.‌flickr‌.com‌/photos/neil_schofield/31649533117/in/photostream/