A PYMNTS Company

New CMA Report Unveils Insights into UK Job Market Trends

 |  January 25, 2024

The Competition and Markets Authority’s (CMA) Microeconomics Unit has released its first major research report, delving into key trends in the UK labor market. The study examines various aspects, including employer market power, the impact on wages, the prevalence of restrictive clauses, and the recent surge in hybrid working arrangements.

The comprehensive report aims to provide valuable insights not only for the CMA’s initiatives but also to influence broader government and policy thinking. Labor markets remain a focal point for the CMA, as outlined in its 2023 to 2024 Annual Plan, emphasizing the significance of understanding competition and employer market dynamics.

The CMA is actively addressing potential anti-competitive conduct within specific sectors, such as sports and non-sports TV production and broadcasting. Additionally, recent expansions into the fragrances industry investigation indicate the CMA’s commitment to examining ‘no poaching’ arrangements.

Read more: UK’s CMA Increasingly Hostile to Business, Says INEOS Chair

Sarah Cardell, Chief Executive of the CMA, will deliver a speech at Durham University to unveil the report’s findings. Some key highlights include:

1. Labor Market Concentration Stable Over Two Decades:

  • The report reveals that labor market concentration in the UK has remained relatively constant over the past 20 years, indicating a consistent ratio between the number of workers and employers. This is in stark contrast to the United States, where research indicates a rising trend in labor market power over time.

2. Regional and Industry Variances in Concentration:

  • Concentration levels differ across regions and industries. Labor markets outside of London and the Southeast show higher concentration. While blue-collar professions experience declining concentration, white-collar workers see steady levels. The impact on wages is notable, with a 10% average decrease in the most concentrated markets.

3. Worker Income Share on the Rise:

  • The share of income workers receive in the UK has slightly increased, constituting around two-thirds of their contribution to revenues. However, in markets with labor market power, workers tend to receive less than the full value of their contribution to revenue.

4. Pervasive ‘Non-compete’ Clauses:

  • Non-compete clauses affect approximately 30% of UK workers, increasing to over 40% in information and communication technology (ICT) and professional and scientific services. Surprisingly, even sectors like retail, education, and food services witness around 20% of workers subject to non-compete clauses.

5. Rise in Hybrid Working Opportunities:

  • Since the onset of the pandemic, the number of jobs offering remote and hybrid working has surged, stabilizing at around 20% of UK roles. Hybrid jobs are more prevalent in areas with lower concentration, such as London, and are associated with a rise in wages.

Sarah Cardell commented on the report, stating, “This report adds to the robust body of evidence supporting the benefits of well-functioning labor markets, widely recognized as an important driver of economic growth.”

The findings are expected to contribute to academic and policymaking discussions, providing insights during a time when economic stimulation and improved living standards are paramount. The CMA intends to leverage these insights to combat anti-competitive conduct in labor markets, furthering its ongoing investigations into suspected agreements between employers.

Source: Gov UK