Do you really want to get rid of the uber rich?

 

The uber-rich are both conspicuous and increasing in number. In this blog I am going to show one way it should be possible to reduce their number. Before doing that, we need to understand where they come from and why both their number and wealth is increasing.

I begin with the Forbes rich list for 2001 and 2024. This list seeks to rank billionaires from the richest to the ‘poorest’.  Forbes identifies 335 billionaires in 2001 with an average wealth of US$ 6.4 billion (in 2024 prices) and 2,781 billionaires for 2024 with an average wealth of US$ 5.1 billion. In 2004 the billionaire wealth ranged from US$ 233 billion to US$1 billion, this being the cut-off point to get into the Forbes rich list. In Figure 1 I show a histogram of the distribution of these billionaires.

Figure 1 

The height of the bars in a histogram tells you how often different billionaires appear in the data. So, the fact that the highest bar is for the lowest level of the net worth of billionaires tells you that across the distribution shown in Figure 1 billionaires with less than US$1.5 billion are the most common type of billionaires. Now clearly having a net worth of US$1.5 billion is a very rich person by any usual standards. However, within the class of billionaires, there are those who are very much richer.  In 2024 the four richest billionaires have wealth of US$ 177, 194,195 and 233 billion respectively, over 100 times the level of wealth of most of the billionaire class. We can see this in the pattern of the histogram shown in Figure 1. Those with net worth greater than about US$30 billion are nearly invisible on the chart.

There are two other implications we can draw from Figure 1. The first is that the average of wealth across the distribution is a misleading statistic as it is influenced by these very few very high wealth individuals. A better measure is the median which is the level of wealth by which 50 per cent have higher wealth and 50 per cent lower wealth. For 2001 the median wealth of the billionaires was US$ 3.7 billion and in 2024 the median value of wealth was US$ 2.4 billion, some 30 per cent lower than the 2001 number. Both year use 2024 prices.

The second implication we can draw from Figure 1 is that wealth within the billionaires in the data is becoming more unequally distributed. It is how wealth is distributed among the very wealthy that produces the uber wealthy. We can see these uber wealthy in Figure 2 which uses data from the World Inequality Dataset.

To find the uber wealthy we need to look not in the top 1 per cent or even the top 0.1 per cent but (at least nearly) into the top 0.007 per cent. Within this last category we have average wealth in the US of US$ 600 million, close at least to the billionaires in our Forbes data. For the UK the average wealth for this last category is just under US$ (ppp) 150 million. For the UK, even at his point, we are a long way from the Forbes billionaires, reflecting just how few there are of them in the UK compared with the US.

In Figure 2 we compare the US and the US in 2023. In Figure 3 we ask how wealth among the very wealthy has increased in both countries. Our data, which is all from the World Inequality Dataset, enables us to see a longer run of data for the US than for the UK. For both countries since the mid-1990s there was been a significant increase in average wealth among the top 1 per cent but more particularly among the top 0.1 per cent. Again, both the level and the increase in wealth has been much greater for the US than for the UK.

The key points that emerges from Figures 2 and 3 is that not only are the uber wealthy a tiny fraction of the top 10 percent but that this wealth is vastly greater in the US than the UK and has been increasing much faster in the US than in the UK. So, we have three questions to which we need answers:

(1) Why is wealth, among the wealthy, so concentrated? 

(2) Why are the wealthy in the US so much wealthier than the wealthy in the UK? 

(3) Why have the wealthy been getting richer so much faster in the US than the UK?

The possible answer to the first of these questions is in the nature of winners in the task of accumulating wealth. If the opportunities to acquire wealth were evenly spread and open to all we would expect to see a rising tide of the wealthy. That is not what we observe at all. We observe a few speculatively successful individuals who come to occupy the top of the top of the distribution.

The answer to our second and third questions is that, at least in the recent past, the US has been greatly more successful that the UK in generating wealth creating opportunities.

So, considering the question posed by this blog - Do you really want to get rid of the uber rich? – one answer may be to make your economy more like the UK than the US.

 

Taxing the rich in Britain

 

A famous quote attributed to F. Scott Fitzgerald about the wealthy is: "Let me tell you about the very rich. They are different from you and me." Ernest Hemingway is said to have retorted, "Yes, they have more money".

 So, how much money do the wealthy currently have in Britain. This question has become a more sensitive one after more than a decade of stagnant living standards for most.

 The guardian reports that “A modest wealth tax aimed at the ultra-rich, for example those with assets over £10m, could generate significant funds. One study suggests a global levy on the top 0.5% could raise about $2.1tn – roughly 7% of national budgets – with the UK alone bringing in around $31bn a year. That revenue could be transformative if used to fund the NHS, education, affordable housing, climate resilience, and long-term care.”

 In this blog I am going to use three sources of data to show how many are rich and just how rich they are and if taxing them is the solution to Britain’s tax problems. The first is data from Forbes on how many billionaires there are in the world. The second is ONS data on aggregate household total wealth. The third is data from the World Inequality Dataset (WID) which is a global comparative dataset organised by Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, Emmanuel Saez, and Gabriel Zucmaninitially.

As the most recent data from the ONS, which gives us a breakdown of wealth across the population of Great Britain, is for 2022 I am going to use data for 2022 from the Forbes list of billionaires and also data from WID for 2022. Forbes shows that in 2022 there were 88 billionaires in the United Kingdom whose wealth ranged from $US 32.5 billion to $US1 billion. The average wealth for these billionaires was $US4.5 billion and the median value was US$2.6 billion. The median value is the one for which half those in the data are above the value and half are below Their total wealth was $US 400.1 billion. In 2020 the US$ to pound exchange rate was 1.5, so in pounds these numbers translate to a range of wealth from £21.6 billion to £0.6 billion and a total wealth of £266.7 billion. Figure 1 shows the distribution of this wealth across percentiles. 

Figure 1

 

In order to compare these very rich individuals with the other wealthy people in the UK we need to use the ONS data. The ONS provide us with total household wealth by decile, ie from the poorest 10 per cent to the riches 10 per cent. These are total numbers. To obtain an estimate of the wealth per individual adult, to compare with our Forbes numbers, we need to make assumptions about numbers of households and number of adults in a household and this I do in Table 1. So, in Table 1 the first column, from the ONS, is for aggregate total wealth in millions of pounds divided between the poorest decile with total wealth of £13, 897 million to the richest decile with total wealth of £5,523,204 million and total wealth, across all deciles of £13,567,890 million. Such large numbers are hard to understand so the Table provides estimates of wealth per household in column (3) and wealth per adult in columns (6).

 The differences across deciles are dramatic, the poorest decile have £4,165 per adult and the richest decile has £1,655,289 per adult, a scarcely credible nearly 400 times difference. It is these differences that are often cited with the implicit implication that here is a large potential tax basis for a wealth tax.

 Table 1 ONS Data 

Before we try and assess how much a wealth tax could raise, we need to investigate how wealth is divided up within the top 10 per cent. Notice from the ONS data in Table 1 while the average wealth per adult is estimated to be £1.7 million, which is vastly greater than the rest, it is far from the billions we read from the Forbes data. It is also far from the £10 million level suggested as the basis for a wealth tax in the Guardian report cited at the beginning of this blog.

 In Table 2 I use the WID data to investigate how incomes are divided up within the top 10 per cent. The WID data provides us not only with the average wealth but also the threshold level (ie how much wealth you need to enter the relevant percentile) and also the share of wealth held by the top shares of wealth.

 From the Table we see not only the inequality of wealth but how it is distributed within the top 10 per cent. The WID data show that to enter the 10 per cent of wealth holder you need £ 613,000 and that the share of the top 10 per cent is 57.1 per cent. This is higher than that implied by the data in Table 1. The WID data also how much wealth varies within the top 10 per cent. We see from Table 2 that the average wealth of the top 1 per cent is £5.61 million, that of the top 0.1 per cent £17.84 million. Table 2 also shows the average wealth for the top 0.007 per cent which at £111.9 million is some 74 times the average.

Figure 2 presents the distribution of wealth within the top 10 per cent in a similar way to how we presented that for billionaires in Figure 1. While the numbers are very different the pattern is the same, with the very richest far richer than most.

Figure 2

So, next back to our wealth tax. Taking the top 0.1 per cent as the “rich” who will be taxed we have 28,300 households with average wealth of £17.84 million so a tax base of £504,872 million. A 1 per cent tax would raise £5,048 million. In 2023/24, UK government raised around £1,099 billion (£1.1 trillion) in receipts – income from taxes and other sources. So, 1 per cent tax on the top 0.1 per cent would raise a tiny fraction of current total revenues.

The problem this analysis highlights is that while there are indeed very rich individuals, they are too few to provide a feasible basis for raising substantial tax revenue. Finally, you might ask where are the billionaires in Figure 2. Even the richest individuals in the WID data have an average wealth of about 70 million, far from the billionaires shown in Figure 1. The billionaires would only in Figure 2 if we could extend the data even further up the wealth distribution. They are too few to appear. This simply emphasises our essential point. There are not enough of the wealthy to provide a good basis for taxation.

What explains the problems the Labour government faces?

  

The Labour government is clearly in deep trouble. In this blog I want to argue that the problems are ones that have a long history but can be solved. The basic problem is that since the 1970s there has not been enough investment in the economy. While the low levels of investment have often been given as a problem facing the economy I want to argue it is the problem. How this problem has affected almost every aspect of what the labour government wants so achieve will be the focus of this blog.

The labour government came to office promising growth. The reason for the promise was obvious. Without growth the rise in public sector spending, which the economy obviously required, would need higher taxes. Having promised that it will not increase national insurance, the basic, higher or additional rates of income tax, or VAT (the three biggest revenue-generating taxes) the government was stuck. Initially Rachel Reeves raised national insurance on firms finessing the manifesto promise on national insurance by refocusing the commitment as not taxing working people. By the middle of 2025 it was widely assumed that further tax rises would be required and how the promised growth was to be achieved was not explained.

To increase the size of an economy requires both more labour and more capital. The ONS has produced data that enables us to measure the total increase of labour and capital to the market sector of the economy. (A note on this data is at the end of this blog). In Figure 1 I show the annual percentage changes of labour and capital services from 1970 to 2024. The red line in the charts is the trend of the growth rate. We see dramatic differences. While there is a modest upward trend in the growth rate of labour services there is a much more pronounced downwards trend in the growth rate of capital services. In the figure I also show average growth rates, for the whole period from 1970 to 2024 and before and after the financial crisis of 2008 and 2009.

Again, the ONS data enables us to measure both these aspect of the determinants of growth per person and we show how their growth rate has varied since the 1970s in Figure 2 and before and after the financial crisis. The left-hand part of Figure 2 shows the growth rates of the capital labour ratio. As we would anticipate from Figure 1 with a rising growth rate of labour and a falling growth rate for capital the result is a rapid decline in the growth rate of the capital labour ratio. There is also a decline in the rate of growth of total factor productivity. Notice that when we get to 2024, ie the year Labour was elected, the growth rate both of the capital labour ratio and total factor productivity is negative.

We can now show how the growth of capital and labour has changed output (the left-hand part of Figure 3) and how output per person has changed (the right-hand part of Figure 3). As we can see from the right-hand side of Figure 3 the long run decline in the growth rate of output per person has given us a negative growth rate by 2024.    

 

It is important not to conclude from these figures that the red line tells us that there has been a steady decline in the rate of growth of output per person. It is probable that the financial crisis of 2008 to 2009 was followed by a step down in the growth for output per person, and the factors determining it shown in Figure 2.

 Finally, we look out at how closely linked are capital labour ratios and total factor productivity to the growth of output per person in Figure 4.

Any view as to how economies grow in the long term must focus on both the extent of investment which ensures rises in the capital stock and factors that determine TFP. The latter are complex and in large part unknown. So, the focus of policy needs to be on how investment can be increased. While the rhetoric of government may focus on growth it is less clear that the means to attain it are understood.

A note on the data

The data used in this blog are ONS data to measure capital deepening and TFP by market sector. They are described as ‘Official Statistics in development’. The ONS notes say that the dataset used contains experimental estimates of growth accounting statistics for the UK market sector. Data for the market sector which is used in this blog ‘includes all industries whose products have an economically significant price. This excludes central and local government, non-profit institutions serving households, and imputed rental. The latter is an estimate of the housing services consumed by households who are not actually renting their residence. Its inclusion in the National Accounts ensures the valuation of housing services is calculated on a consistent basis over time and between countries.’

 

What explains the current crisis in UK living standards?

 

      

 It is no secret that voters are dissatisfied with the performance of politicians in improving their living standards. One well known aspect of this dissatisfaction is the failure of hourly earnings to increase since the financial crisis of 2007-08. A fact documented in previous blogs. In this blog I am going to look at how living standards have changed under both conservative and labour government since the arrival in Downing Street of Margaret Thatcher.

 I start in Figures 1 and 2 showing the differing outcomes for hourly earnings and household incomes. The dates shown in the Figures delineate the periods of the different governments after 1979. These are first the Thatcher government from 1970 to 1991, the John Major government from 1991 to 1997, New labour under Tony Blair and Gordon Brown from 1997 to 2010 and the period of coalition and conservative government after 2010. I include 2019 as the period before the Covid pandemic impacted all aspects of the economy.

                                                         Figure 1 Real Hourly Earnings

Figure 2 Real Incomes

Sources: ONS Data (for details see end of blog) 

The Thatcher governments saw a 40 per cent rise in real hourly earnings, just outstripping the rise of 37 per cent under New Labour. These substantial increases stand in dramatic contrast with the coalition and conservative governments after 2010. More than a decade after David Cameron became prime minster real hourly earnings had not risen  (see Figure 1). However, and less well known, over this period of falling, or stagnant, hourly earnings real incomes from work rose. Indeed, rose quite rapidly (see Figure 2).

  In Figure 2 I present two measures of household income that are provided by the ONS. The first termed in the Figure market income is the incomes from employment and self-employment, pensions and investment income and includes imputed income from benefits in kind. It is, in the main, the incomes available from the market. The second is a measure of disposable income. This differs from market income by the benefits that households receive less the taxes they pay. In summary market income would be incomes before the intervention of government acting to redistribute income through, for example, employment and support allowances, incapacity benefits and income support. The data in Figure 2 shows equivalised disposable income where the term ‘equivalise’ refers to an adjustment made for household size. Cleary an income for a single person household is not the same as for a family with children.

 As Figure 2 shows incomes from work, market income, increased by 38 per cent from 2010 to 2022. This is slightly higher than the increase for the previous decade. So why the widespread dissatisfaction with living standards? The answer is also in Figure 2 which shows that between 1979, the advent of the first Thatcher government, and 2010, the end of the New Labour government, real equivalised disposable income doubled. In contrast, in the twelve years that followed real equivalised disposable income increased by only some 9 per cent. This implies a dramatic slowdown in the growth of equivalised disposable income.

 What explains these very different patterns for market and disposable incomes? One possible answer, also shown in earlier blogs, is the dramatic rise in employment after 2010 - see Figure 3. Over a period from the start of the financial crisis in 2007 and the start of Covid in 2019, where these was no rise in real average earnings, the numbers in employment increased from 29.2 million to 32.8 million. An increase in employment of 3.6 million or a rise of some 12 percent. There was also an increase in self-employment from 3.9 million to 4.7 million, a rise of 1.2 million more in self-employment an increase of 31 per cent

 

Figure 3 A Sustained Rise in Employment after the Financial Crisis

Source: ONS Data

 So, it is the rise in employment with stagnant earnings which can explain the growth in market incomes. But what explains the much lower growth in disposable incomes? The answer is shown in Figures 4 and 5. Figure 4 shows the percentages of benefits and taxes to market incomes.  In Figure 5 the same data is presented as the amounts of benefits and the amount of taxes and national insurance contributions paid over the period since 1979 for the average household.   

Figure 4 Tax rates rising and benefits rates falling after 2010

Figure 5 Amount of taxes increase by 50% under Post 2010 governments

Sources for Figures 4 and 5: ONS Data (for details see end of blog)

This rise in taxes paid by average households is part of the story which explains the difference between market and disposable income. As Figure 4 shows the tax percentage changed relatively little from 1979 to 2015 fluctuating between 22 and 24 percent of market incomes. Given the sustained rises in income over this period the implication is for a substantial rise in the average tax paid by households shown in Figure 5.  The rise in taxes paid after 2010 reflects the rising tax rates. However, the gap between market income and disposable incomes was not only the effect of increases in the average tax rate. Allied to this increase in taxes was the reduction in the benefits percentages (details of these can be found below). In fact, in percentage terms the fall in the benefits percentages was much greater than the increase in the tax percentage.

 So, we can now answer the question as to what explains the current crisis in UK living standards. There are three elements that underlie this crisis. The first, and most well know, is the failure to real earnings to rise since 2010. The reasons for this were the subject of my last blog. The second was the implied need to work more reflected in large increases in employment. The third was increases in taxes and reduction in benefits ensuring that disposable income rose much less than income from work.

Surely an unbeatable formula for ensuing unhappiness with policy outcomes.

 

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A note on ONS data on incomes and taxes by decile

 The basis for the data shown in Figures 2, 4 and 5 is data from the ONS which provides a breakdown on incomes, benefits and taxes by decile. First is data which the ONS call “Original” income which is termed “Market” income in the Figures.

 Market Income consists of:

Wages and salaries

Imputed income from benefits in kind

Self-employment income

Private pensions, annuities

Investment income

Other income

This differs from disposable income by the benefits that household receives less the taxes they pay.

 Benefits included in the ONS Data which is simply termed benefits in Figure 4 and 5:

Jobseeker's Allowance (contribution-based)

Jobseeker's Allowance (income-based)

Employment and Support Allowance

Incapacity Benefit

Income Support

Statutory Maternity Pay/Allowance

Child Benefit

Tax credits

Housing Benefit

State Pension

Pension Credit

Widows' benefits

War pensions/War widows' pensions

Carer's Allowance

Attendance Allowance

Disability Living Allowance

Personal Independence Payment

Severe Disablement Allowance

Industrial Injury Disablement Benefit

Student support

Other benefits

Total direct taxes:

Income Tax

National Insurance contributions

Student loan repayments

Council Tax and Northern Ireland rates

less: Council Tax benefit/Rates rebates

 Disposable income:

In the Figures this is defined as market income + Benefits - Direct taxes.

 In the ONS data there are more details but I have confined attention to the most important for the purposes of showing how market incomes differ from disposable incomes.

 

 

 

 

 

 

 

 

 

 

Why have wages stagnated under the last coalition and conservative governments (and why that might continue under labour)

 

The focus of this blog is what happened to real wages under the last coalition and conservative governments and why. I begin in Figure 1 by showing just how dire were economic outcomes for earnings under these governments. In 2023, the year before the election, real average earnings (that is average earnings using 2019 prices) were the same as they were in 2010, the year the coalition of the conservative and liberal democratic parties took office. As the graph in Figure 1 shows his was true for all workers as well as for those working in the private sector. This failure of earnings to rise over the time of these governments is only part of the problem we need to explain. As Figure 1 shows there was a sharp fall for average weekly earnings for both all workers and for private sector workers from their peak in 2008 to 2014. A fall of 10 per cent for all workers and of 11% for the private sector.

Figure 1

Figure 2

 The pattern shown in Figure 1 is quite different from any pattern for real average earning in the period since the Second World War as we can see in Figure 2. In that Figure I mark the recessions that have occurred since the war, defined as falls in total GDP. There were modest falls in real earnings during  the 1979 and 1991 recessions while there was no effect for the 1981 recession. The picture shown in Figure 2 is of a steady rise in real earnings brought to a rather dramatic end at the time of the financial crisis in 2007/2008.

The data shown in Figure 2 is for all workers as I do not have a long run of data for private sector workers. So, what can explain the fall in earnings for all workers in the period after the financial crisis? To answer that question, we need to step back and ask what does determines real earnings. The answer is the productivity of those workers. In the long run the only way real earnings can rise is if labour is more productive in the sense that labour produces more output per hour. In Figure 3 I show how output (measured as gross value-added) per hour worked has grown since 1970, the first year for which this data is available from the ONS. To ensure we can compare productivity, which is per hour worked, with real earnings I show real hourly earnings also in Figure 3. The pattern for real hourly earnings is virtually identical to that for the weekly earnings Figure shown in Figure 1 and 2.

 

Figure 3  Productivity and Real Hourly Earnings

As with real earning the data show a sharp break in the pattern of productivity growth with, not a fall, but a marked slow down in growth after the financial crisis. Now that can happen in various ways of which the skills the labourer has is one. What I want to focus on here is the amount of capital labour has to work with. The reason for such a focus is that the skills of the workforce change slowly and what we see in Figure 3 is a very marked deceleration in the growth of productivity.

So, our question can be reframed as: Can the pattern of the change in productivity and real hourly earnings be linked to changes in the amount of capital services to labour hours? The ONS provide data for the market sector of the total capital services available and the total hour worked where an allowance is made for what the ONS terms the quality of the labour force. In Figure 4 I show both the ratio of capital services to labour hours from 1970 to 2022 and, again, real hourly earnings until 2023.

It is very clear from the data shown in Figure 4 that the financial crisis, starting in 2007, led to a marked fall in the capital labour ratio coinciding with the fall in real hourly earnings. For both real hourly earnings and the capital labour ratio not only did the steady rise which had occurred in both series from 1970 to 2007 abruptly cease but, by 2022, had not just recovered to the level in 2010. If we want to understand the causes of stagnating real hourly earnings then the failure of the economy to provide a rising volume of capital services for labour is clearly one possible part of the explanation. As a first step to understanding what is going on in the decline in the capital labour ratio, I plot in Figure 5 the volume of capital services and labour hour works separately.

What is striking in Figure 5 is that the patterns of the growth in the services of capital and labour hours have changed markedly in the period after the financial crisis. In the period from 1970 until the financial crisis there were fluctuations in the supply of labour but no trend. The fall in employment in the 1970s and early 1980s were caused by the recessions of 1979 and 1981. In the period after that there was a period of recovery brought to an end by the 1991 recession to be followed by a shallow recovery. The financial crisis did lead to a sharp fall but, from 2010, the start of the coalition government, the supply of labour rose sharply.

Figure 4 The Capital Labour Ratio and Real Hourly Earnings

Figure 5 Labour hours and capital services trends

 

In my last blog entitled ‘The UK’s Employment Miracle Post the Financial Crisis’ I noted that the employment growth, which is summarised in the hours worked shown in Figure 5, included employment growth for both men and women and for full and part time work. What Figure 5 shows is that this growth in employment after 2010 exceeded the growth in capital services. While slowing growth in capital services was part of the reason for the fall in the capital to labour ratio another part was the rapid growth in labour supply.

 

The picture painted by the Figures shown above is one where there were major changes in the patterns of both real earnings and productivity following the financial crisis. The falls in both were unprecedented and in 2015 the level of real earnings reached its lowest point after 2010, the same level as a decade earlier. The referendum to leave the EU in 2016 was held against this backdrop of falling real earnings. If the analysis presented above is correct the EU was not the problem but the real problem was the domestic failure to ensure growth in the amount of capital labour had to work with. Unless that changes the period of stagnating real earning under the coalition and conservative governments will continue under the current labour one.

The UK’s Employment Miracle Post the Financial Crisis

 

In an earlier blog I focused on the major puzzle about the UK economy after the financial crisis of 2007 to 2008. Why, after this crisis, did employment grow so rapidly when real hourly earnings were falling. In this blog I want to show what kind of jobs were being created in this period of unprecedented employment growth.

 The UK labour market is a complex one. The growth in employment encompasses many different types of jobs. One important distinction is between part and full-time work, where women are much more likely to be part-time workers. Is this part-time work a matter of choice or are these workers unable to obtain the full-time employment they prefer? A second important distinction is between being a wage employee and being self-employed. A growth in self-employment, rather than wage employment, may indicate very different mechanisms of employment growth. A third distinction we need to consider is between the public and the private sector. There is a view among right-wing commentators that only jobs in the private sector are ‘real’. Finally, there is a view that the ‘gig’ economy has grown in importance and that rather than there being a jobs renaissance in the UK there has been a race to the bottom in the type of jobs being created. I now consider each of these dimensions of employment growth in turn.

 Full and part-time Work

 In terms of job creation, a rise in part-time employment is ambiguous. Are those working part-time because they cannot find a job or is it preference to balance household or child-care responsibilities or simply not wishing to work full-time. I will come to that below. In Figure 1 below I show the growth of full and part-time work for both employees and the self-employed, by gender, over the period after 1985.

 

Figure 1 Full and Part Time work by gender: 1985-2019

 

The growth in total employment was the focus of my last blog. I showed there that not only did employment grow very rapidly after 2010 but the employment rate, the proportion of the population in employment, grew to its highest level ever. In Figure 1 we see the type of job growth that underlay this remarkable growth in employment. The summary fact from the Figure is that both full time and part time jobs, meaning wage jobs and self-employment, for both men and women all grew. Between 2009 and 2019 (2009 being the lowest point reached by employment in the aftermath of the financial crisis) total employment increased by some 10 per cent. The most rapid rise was for full time female employment which increase by 14.3 per cent over this period, the lowest rise was for male part-time employment which only rose by 4.7 per cent.

 

Is part-time work preferred?

 

We are left with the question - how many of those working part time wish to work full time and how has that proportion been changing? The answer is shown in Figure 2.

 

Figure 2 Part Time Workers

 

It is clear from the chart of Figure 2 that at the time of the 2007 to 2008 financial crisis more than 50 per cent of male part time workers did want a full-time job, this was true for only about 20 per cent of female part time workers. If we think of those part-time workers who want full time work as ‘involuntarily’ part-time than in the immediate aftermath of the financial crisis their numbers increased for both men and women. However, this was a short-term effect. After 2014 the numbers of these ‘involuntarily’ part time workers decreased as a proportion of such workers. In fact, by 2019 the proportion of male workers who did NOT want a full-time job was the highest ever recorded since data in this form was collected in the early 1990s. For women there has been a long-term trend by which, again as a proportion of those working part time, they did want a full-time job. By 2019 this was just over 20 per cent. 

 

Private and Public sector jobs

There is a view among right-wing commentators that only jobs in the private sector are ‘real’. This view does not make a lot of sense as many public sector employees work in public services. It is also the case that with the privatisation program begun under the Thatcher government many workers have moved between being classified as public to being private sector, with no change in their jobs. Indeed, these shifts have complicated the task of the ONS in measuring private and public sector jobs. However, using ONS data which seeks to ensure that there is a continuity in the definition Figure 3 shows clearly that all the jobs growth that has occurred since the financial crisis has been in the private sector.

 

Figure 3 Private and Public Sector Employment

 

The ‘Gig’ economy

 A final major concern regarding the pattern of job creation after the financial crisis has been the notion of the gig economy where employment is precarious and hours variable. In a BBC report of February 2017, the gig economy was defined as one where, instead of a regular wage, workers get paid for the "gigs" they do, such as a food delivery or a car journey. It then said that ‘in the UK it's estimated that five million people are employed in this type of capacity.’ It is not clear where that number comes from. Clearly the notion of a ‘gig’ job is not clear cut.

 In using the ONS data to measure the size of the ‘gig’ economy there seem two options. One is to define the ‘gig’ economy as those who work part-time as self-employed.  A second is to identify the ‘gig’ economy with workers the ONS identifies as temporary. These are workers who are on a fixed period contract, agency temping, causal or seasonal work or, for some unstated reason in the survey, do not have a permanent job.  As we have seen by 2017 more than half of those working part-time do not want a full-time job so using the second of these definitions seems to capture better the notion of ‘gig’ work.

 In the left-hand part of Figure 4 I show the number of such temporary workers, classified as whether they are full or part-time.  In the right-hand panel I show temporary workers as a percentage of total employment. 

Figure 4 The ‘Gig’ Economy

If we view these temporary workers as being the gig economy than we obtain a number 0f 1.8 million in 1997 when this data was first reported by the ONS. The numbers then fell until the advent of the financial crisis, after which it rose back to the 1997 level. However, since 2015 the number have fallen back to the pre-crisis level. As the right-hand chart in Figure 4 shows as a percentage of total employment by 2019 the proportion of temporary workers in total employment was the lowest it has ever been. 

 The key fact of the UK economy over the period since 2010 up to 2019 is the rapid growth of all forms of employment, for both men and women, of which the ‘gig’ economy is by far the least important.

We are left with a major puzzle. Why in a period of falling real wages did employment for both men and women, and for full and part time work, expand so rapidly? In future blogs I will seek to answer that question.