Exploring Structural Change in Uk Economy and Labour Market Inequality in London

Topics: Economy, London, Supply and demand Pages: 18 (6196 words) Published: April 23, 2013
MA Human Resources and Employment Management

Assignment 1
Exploring Structural Change in the UK Economy and the Extent of Labour Market Inequality Within London: Implications for the HR Function and HR Practitioners

Word Count: 4,455 words (main body of assignment)

How the structure of the UK economy has evolved and changed since the 1970’s, the impact on organisations and HR functions3
Overview of key factors responsible for structural change3
Impact on the external labour market, the employment relationship, the psychological contract and the policies and practices of HR departments4
Challenges the 2008 recession has brought for organisations and how organisations and HR departments have responded6
Analyse and assess the regional economy and labour market of London, highlighting labour market participation rates of different societal groups8
Key Characteristics of the Regional and London’s Economy8
The Labour Market of London8
Labour Market Participation Rates of Different Societal Groups in London9
Potential Causes and Reasons for any Labour Market Inequalities in London11
Labour Market Demand Factors11
Labour Market Supply Factors13
Distinctiveness of London and possible changes over the next five years14
Significance for the skills competencies and knowledge of HR professionals operating in the region14

How the structure of the UK economy has evolved and changed since the 1970’s, the impact on organisations and HR functions Since the 1970’s, the UK economy has undergone fundamental structural changes moving away from one dominated by manufacturing to post industrial, service based economy. Manufacturing had accounted for almost 30 % of Britain's Gross Domestic Product. Employment in manufacturing has since reduced by half with a similar fall in the public sector. Employment in the service sector, by contrast doubled in 2000, with the fastest growth in the financial services sector (Marchington & Wilkinson, 2012).

Overview of key factors responsible for structural change
Political and economic ideology: A driving force behind the economic structural changes was the adoption of neo-liberal economics by Thatcher. This was a significant departure from Keynesian economics, where the state ran large sectors of the economy and the employment relationship was largely determined by collective bargaining. The economy in the 1970’s suffered from high inflation, taxation, unemployment, heavy regulation and overly powerful trade unions (Marchington & Wilkinson 2012). Thatcher policies led the agenda of marketization and privatization. During the 1980s state run enterprises were privatized, internal markets introduced to public sector, taxes cut, markets deregulated and trade union powers were diminished (Robinson 2006). The policies required organisations to be efficient, customer focused, deliver quality and ensure competitiveness to survive in the ‘free market’ and there was a resulting increase in efficiency and productivity of the UK economy (Kew & Stredwick 2010). Successive governments have continued to adopt the same economic and political ideology continuing the transition into a post-industrial, globalized service economy (Marchington & Wilkinson 2012). New Labour believed in the concept of a knowledge economy centered around producing ideas, software and brand (Chakrabortty 2011). Globalization: Although there is no single definition of globalization, there are key aspects attributable to globalization that impacted the structure of the UK economy since the 1970’s. Globalization has increased free mobility of labour, capital and trade. (Parker 1998) In addition to the requirement to be more competitive, there was a large scale migration of manufacturing and administrative jobs from the UK to cheaper labour destinations such as Eastern Europe and the Far East. (GLA 2007). Labour...
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