Changing Work Patterns - UK - August 2003

SUMMARY

The last few decades have witnessed a revolution within the workplace as aseries of economic, demographic, societal, regulatory and technological forceshave all combined to change the face of the UK labour market.

Some of the key themes associated with this change in working patterns haveincluded:

•  the shift from the manufacturing to the service sector
•  the growth in part-time employment
•  the rising prominence of women within the workforce
•  a gradual ageing of the labour force
•  the growing importance of temporary and self employment
•  the adoption of a variety of flexible working practices

These changing patterns of employment have had important implications for thefinancial services industry. Indeed, providers have increasingly had to respondto the changing conditions prevailing in the labour market via a range ofinitiatives which have particularly centred around product innovation and anextension in distribution capabilities. In addition, changes in work patternshave also provided the financial services industry with new opportunities toexploit, particularly in the area of pensions and the provision of a range ofinsurance-related products.

Mintels latest report examines all the key themes around the topic, analysingthe latest developments in the market to identify their impact on the productsprovided by the financial services. Exclusive consumer research identifies theemployment status of a fully representative sample of the UKs population andthen investigates consumers attitudes towards employment benefits and theirworking lives. Offering you new insight into:

•  Market factors
•  Changing nature of the workforce
•  Changing work patterns and loans, credit and banking products
•  Changing work patterns and pensions
•  Changing work patterns and insurance
•  Consumers - job status and stability
•  Consumers - employee benefits and retirement intentions
•  Future trends
•  Labour market forecasts

TABLE OF CONTENTS

Introduction and Abbreviations

• Aims of the report

Abbreviations

Executive Summary

• The change in work patterns encompasses a number of key themes
• Financial services providers are responding to these changing patterns
• Full-time permanent employees make up less than 60% of the workforce
• The research also highlights the decline in job stability...
• ...and the increasing adoption of flexible working practices
• A third of people will have to work up to or beyond state retirement age

Market Factors

• Population changes are set to increase the pool of potential workers...
  • Figure 1: Proportion of population of working age, 1981-2007
• ...with a much larger proportion among the older age groups
• Life expectancy continues to rise...
  • Figure 2: Life expectancy at birth in the UK, by gender, 1901-2021
• ...which means that people are requiring bigger retirement funds...
• ...and this will encourage people to extend their working lives
• Sustained economic growth has stimulated record employment levels
  • Figure 3: Annual rate of real economic growth in the UK, 1991-2002
• The marriage rate has been in decline for the last 30 years...
  • Figure 4: Number of marriages and remarriages in the UK, 1950-2001
• ...while the number of divorces has risen dramatically
  • Figure 5: Number of divorces in the UK, 1950-2001
• The combination of these trends has altered household formation
  • Figure 6: Marital status, England and Wales, 1971-2001
• These social trends are having a major impact on employment patterns
• Employment legislation is set to encourage more flexible working policies
• Government initiatives are also helping mums back into the workplace
• Plans have also been announced to ban ageism at work
• Rising consumer expectations have encouraged more flexible working
• Technological changes will lead to greater flexibility in working patterns

Changing Nature of the Workforce

• Employment levels have risen to record levels
  • Figure 7: Summary of the UK labour market, 1993-2003
• The labour force is gradually ageing...
  • Figure 8: Employment rates, by age group, 1993-2003
• ...meaning the over-50-year-olds are set to become increasingly important
• An increasing proportion of women have entered the labour force...
  • Figure 9: Female participation in the labour force, 1984-2003
• ...and this has boosted the overall influence that women now exert
• The shift from manufacturing to service industries continues
  • Figure 10: Service sector jobs versus manufacturing jobs in the UK, 1980-2003
• Structural change has affected both male and female employment patterns
  • Figure 11: Workforce jobs in the UK, by gender and industry, 1980-2003
• Regional changes in employment levels have also been evident
  • Figure 12: Regional employment levels, 1997-2003
• Financial services providers are responding to the flexible workforce
• Part-time employment has increased sharply in the last few decades
  • Figure 13: Part-time versus full-time employment, by gender, 1984-2003
• Part-time workers tend to do so because it suits their requirements
  • Figure 14: Reason for being in part-time employment, 1993-2003
• A rise in job-sharing opportunities could boost part-time employment
• Around 1?·million people are employed on a temporary basis
  • Figure 15: Number of temporary employees, by gender, 1992-2003
• Temporary workers usually do not want a permanent position
  • Figure 16: Reason for being in temporary employment, 1993-2003
• More than one in ten of the workforce are self-employed
  • Figure 17: Number of people self-employed, by gender, 1984-2003
• An array of flexible working arrangements have been adopted
  • Figure 18: Proportion of organisations offering flexible work policies, by type, 1999 versus 2002
• An increasing number of people are working from home
• The demise of the job for life mind-set
  • Figure 19: Length of service of employees in the UK, 1986-2002
• UK employees typically work long hours
  • Figure 20: Average weekly hours worked by employees in the UK, 1993-2003
• There has been a rise in the number of people with second jobs
  • Figure 21: Number of people with second jobs, by gender, 1993-2003

Changing Work Patterns and Loans, Credit and Banking Products

• A current account is an imperative for members of the workforce
• Rising prominence of female workforce has boosted account openings
• Trends in work patterns mean that access is becoming more vital...
• ...current account distribution has therefore been revolutionised...
• ...with a significant growth in direct banking
  • Figure 22: Launch dates of new direct banking operations
• Branch opening hours have also been affected
• Increasingly flexible work patterns will continue trend to remote access
• All-in-one accounts have been developed to add further flexibility
• Flexible mortgages were introduced to reflect changing work patterns...
• ...but these products have not been tested in an economic downturn
• Changing labour market conditions could cause problems for borrowers
  • Figure 23: Mortgage debt to households disposable income, 1975-2002
• Older consumers could become more important in the loans market...
• ...while extended working lives may stimulate a rise in mortgage terms
• Changing work patterns have boosted the sub-prime lending market
• Credit criteria will need to adapt to changing employment patterns
• Flexible personal loans introduced for workers with variable income

Changing Work Patterns and Pensions

• The tick of the pensions time-bomb is getting louder
• Changes in occupational pensions will also hinder retirement plans
  • Figure 24: Employees in occupational pension schemes, 1953-2000
• The pensions problem is exacerbated by a decline in job stability...
• ...and the rising prominence of self employment and temporary work
• Changing work patterns have necessitated a more flexible approach
• The launch of the stakeholder pension has increased flexibility
  • Figure 25: Number of stakeholder pensions sold, 2001 Q2-2003 Q1
• This emphasises that selling pensions remains a relatively difficult task
• Changing work patterns have boosted single premium business
  • Figure 26: Regular and single-premium pension sales, 1998-2002
• Fluctuations in income may also boost other lump-sum investments
• People are likely to have to work longer to fund their retirement
• Rising female participation rates offer an opportunity for pensions industry

Changing Work Patterns and Insurance

• Decline in job stability has boosted market for some insurance products
• Growth in self employment should also boost insurance sales
• Withdrawal of state support to homeowners heightened the problem ...
• ...with MPPI now particularly vital for self-employed and contract workers
• Household insurers will need to consider the impact of home workers
• Flexible working patterns may boost travel insurance market

The Consumer - Job Status and Stability

• Changing work patterns are having a major impact on financial services
• More than half of the sample are currently in employment
  • Figure 27: Summary of work status of respondents, by gender, May 2003
• Full-time permanent employees make up less than 60% of the workforce
  • Figure 28: Work status of people in employment, May 2003
• Two thirds of male workers are full-time permanent employees
  • Figure 29: Work status of people in employment, by gender, May 2003
• The likelihood of being self-employed rises with age
  • Figure 30: Work status, by socio-demographic groups, May 2003
• Job stability has waned over the last few decades
• Almost a fifth of workers have been with their employer for over 16 years
  • Figure 31: Length of time with current employer, May 2003
• But a third of workers have been with their employer for under two years
• Two thirds of self-employed have been doing so for five years or more
  • Figure 32: Length of time with current employer, by work status, May 2003
• Length of service with an employer tends to increase with age
  • Figure 33: Length of time with current employer, by socio-demographic groups, May 2003
• Half of all workers have remained with the same employer in last five years
  • Figure 34: Number of employers in last five years, May 2003
• Part-time workers have had more employers than full-time workers
  • Figure 35: Number of employers in last five years, by work status, May 2003
• Younger workers are more likely to have had several employers
  • Figure 36: Number of employers in last five years, by socio-demographic groups, May 2003
• A fifth of the workforce are thinking about changing jobs
  • Figure 37: Future job intentions, May 2003
• Four out of ten temporary workers are planning to change jobs
  • Figure 38: Future job intentions, by work status, May 2003
• Younger workers are more likely to be planning a change of jobs
  • Figure 39: Future job intentions, by socio-demographic groups, May 2003
• An increase in pay is the main motivation for switching jobs
  • Figure 40: Reasons for wanting to change jobs, May 2003
• Men are looking for more pay; women want a new challenge
  • Figure 41: Top six reasons for changing jobs, by socio-demographic groups, May 2003

The Consumer - Employee Benefits and Retirement Intentions

• Employers have become more flexible in their working practices
• Flexible working is having an impact upon financial services
• Half of the workforce are now eligible for some form of flexible working
  • Figure 42: Availability of flexible working practices, May 2003
• A third of the workforce are taking advantage of flexible hours
  • Figure 43: Take-up of flexible working policies, May 2003
• Six out of ten workers are not benefiting from flexible work policies...
• ...but government efforts may yet boost the adoption of flexible policies
• Only a fifth of eligible employees have taken a career break
  • Figure 44: Proportion of eligible workers taking up flexible working policies, May 2003
• Women are more likely to take advantage of flexible work practices
  • Figure 45: Take-up of flexible working policies, by socio-demographic groups, May 2003
• Over half of all workers are eligible for some form of employee benefit
  • Figure 46: Availability of employee benefits, May 2003
• Flexible benefits packages are becoming increasingly popular
• Over a third of the workforce are members of a company pension scheme
  • Figure 47: Take-up of employee benefits, May 2003
• Two-thirds of eligible employees take advantage of a company car
  • Figure 48: Proportion of eligible workers taking up employee benefits, May 2003
• Abs are the most likely to be in receipt of employee benefits
  • Figure 49: Take-up of employee benefits, by socio-demographic groups, May 2003
• Around 40% of workers are offered support with their training needs
  • Figure 50: Availability of training opportunities, May 2003
• More than a fifth of the workforce take time off for training
  • Figure 51: Take-up of training opportunities, May 2003
• Participation in training tends to decrease with age
  • Figure 52: Take-up of training opportunities, by socio-demographic groups, May 2003
• Demographic pensions time bomb is slowly ticking away
• A third of people will have to work up to or beyond state retirement age
  • Figure 53: Retirement intentions, May 2003
• Four out of ten people want to stop work early or cut back their hours
• A tenth of non-retired adults actually want to carry on working
• Permanent employees are more likely to want to stop work early
  • Figure 54: Retirement intentions, by work status, May 2003
• One in six of the self-employed expect to work during their retirement
• Abs display the strongest desire to curtail their working lives
  • Figure 55: Retirement intentions, by socio-demographic groups, May 2003
• Full-time workers and men feel more compelled to carry on working
• Realisation of the need to extend working lives increases with age

The Future

• Changes in employment patterns are set to continue
• Rising female participation rates means the influence of women will grow
• The 50-64-year-olds are set to become an increasingly important sector
• Demand for pensions will be further boosted by changing work patterns
• Insurance-related products should also benefit from rise in self-provision
• Financial services industry will need to be increasingly responsive

Forecast

• Current trends set to harden
  • Figure 56: The changing structure of UK employment, 2003-07
• More part-time male workers
  • Figure 57: Trends in full-time and part-time employment, by gender, 2003-07
• Rising number of self-employed brings new challenges
• Women have more financial power

Appendix: Research methodology

Index of reports