Untangling the effect of insecure work on local economic performance: towards a new research agenda

Posted on: 6 February 2024 by James Hickson and Rebecca Florisson in Blog

Insecure work can have a cost for individuals, but how does insecurity affect local economies? This blog proposes a new direction for future research, that quantifies the effect insecurity is having locally in order to inform new approaches to improving the quality – and not just quantity – of work.

The prevalence of insecure work is a national issue. Yet the consequences of precarious, unprotected and poorly paid employment are felt most keenly at the local level; with different places affected in different ways, and to different degrees.

Indeed, recent Work Foundation research has illustrated that an uneven geography of insecure work exists across the country, with insecure jobs often concentrated in areas with higher levels of economic inactivity and sluggish economic performance. While this research can tell us about the level of insecure work in specific areas, it cannot tell us how the impact of insecurity on the economy.

Does insecure work pose a risk to local economies?

Whilst the problem of insecure work is typically considered in terms of the significant uncertainty and hardship this can cause for individual workers, there are reasons to suspect that a high concentration of severely insecure work within a particular area could also have wider implications for the local economy, and for local communities. For example:

• Insecure work risks undermining local economic performance. New evidence from across Europe suggests that higher concentrations of insecure work may be associated with lower levels of productivity growth over time. A high prevalence of insecure work may, then, also be contributing to existing productivity gaps within and between UK regions; undermining the competitiveness of certain local labour markets, while also further complicating the UK’s national productivity challenge.
• Insecure work risks undermining local economic demand. Low paid and unstable work makes household finances less predictable; and could risk increasing the levels of significant debtand in-work poverty within a local economy. Coupled with a long-running cost of living crisis, this income insecurity may contribute towards limiting consumer confidence and spending power within a particular local economy.
• Insecure work risks undermining local labour supply. The negative impacts of insecure work on physical and mental health were recognised in The Marmot Review, and highlighted as a contributor to widening health inequalities. Poor health is a significant barrier to labour market participation in the UK, with concerns that economic inactivity due to ill-health now represents a particular challenge in the aftermath of the COVID-19 pandemic.

Why we need to untangle the role of insecurity in local economic performance

Levels of insecure work are an important signal of local economic health. We see higher concentrations of insecure work in areas where this risks exacerbating long-standing challenges of economic precarity and deprivation. Understanding the geography of insecure work across the UK should be a key consideration for those seeking to address spatial inequalities and rebalance regional growth. However, whilst we may have some sense of how insecure work can affect local economies in the abstract, it can be difficult to quantify the precise impacts on particular local economies.

This is because it can be difficult to untangle insecure working conditions from the influence of an area’s historical and industrial past on the current state of the economy. This prompts us to wonder whether insecure employment is a function of underperforming economies, or whether underperforming economies are a function of higher rates of insecure work? Furthermore, to what extent do these factors exacerbate each other?

It is important to highlight what we know, but even more to establish what we don’t yet know about these dynamics because they have significant relevance to achieving key policy goals. If insecure work acts as a drag on local economies, then allowing it to proliferate by failing to regulate the labour market is an actively harmful political choice.

Why this matters now

Insecure work is often defended on the grounds of economic necessity, as something that answers to the needs of businesses, whilst also helping to bring more people into the labour market. Government initiatives (such as freeports) are often claimed to increase employment opportunities within an area, but rarely tie any conditions to the quality of that employment. If mismanaged, these kinds of labour market interventions may actually undermine local economies – and local communities – by fuelling insecurity and lowering employment standards. We know that there is a cost to insecure work, at least to individual workers who experience insecurity. And yet the relationship between insecure work and longer-term economic and historical industrial composition is not well understood, nor the effect of insecurity on communities.

Future research should therefore seek to quantify the particular harms that insecure work may be causing across local economies more robustly. In order to do so, researchers will need to understand the gaps in existing local economic data, and consider how these could be sufficiently addressed. Importantly, this kind of quantitative data analysis should be complemented with forms of qualitative research that can help to provide a more nuanced account of the relationship between insecure work, economic history, and industrial composition, within a particular locality. This kind of deep dive research could be a valuable source of evidence and intelligence for local economic policies, and for strategic interventions aimed at rebalancing regional economic performance; helping to weigh up the local costs of insecure work against any purported benefits of increased employment.

Dr James Hickson is a Research Associate at the Heseltine Institute.

Rebecca Florisson is Principal Analyst at the Work Foundation.