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Ian Brinkley
Economic Advisor
Ian Brinkley

Fear at work ā€“ why is it worse than it was in the 1980s recession?

Authors: Ian Brinkley Ian Brinkley

21 May 2013

The latest findings from the 2012 Skills and Employment Survey on fear at work make sobering reading. In 2012, roughly one in four employees where afraid they might lose their job and become unemployed; roughly the same percentage were anxious about unfair treatment; and between 30 and 40 % were anxious about changes in job status – such as less say, less skill use, less pay or less interesting work. On all of these dimensions except unfair treatment, the public sector fared worse than the private sector.

Some of these results are less surprising than others. When unemployment is high and the economy has only recently emerged from a deep recession, we might expect a high degree of concern about job loss. What is more surprising is that levels of concern are significantly higher than in 1986, when just over one in five employees were afraid of losing their job and becoming unemployed.

Unemployment in 1986 was over 11 %, compared with around 8 % in 2012, while the share of the working age population in a job was less than 68 %, compared with over 71 % in 2012. Moreover, compared with the 1980s, employers have made much greater use of wage flexibility as an alternative to job cuts and have been hiring more strongly. In 2012, employment was higher than in 2008, at the start of the recession, whereas in 1986 it was still below its 1980 level. So while on these indicators people should have less concern about job loss than they did in 1986, they in fact have far more.

The most obvious change has been in the public sector. Fears about job loss in the public sector have historically been either lower or about the same as in the private sector. In 2012 they were significantly higher, with the share of public sector employees saying they were afraid of losing their jobs doubling since 2001 to just under 30%. In 1986 the share was less than 20%. As we have shown, the 1980s cuts in the public sector were driven by the privatisation programme, not reductions in public service employment. The cuts imposed since 2010 have been large and rapid by historical standards, and have been centred on the public services.

However, the private sector also shows an increase in worries about job losses comparing 2012 and 1986, albeit less dramatically. One striking feature is how persistent concerns about job losses are. The share of private sector employees who were concerned about job loss was actually higher in 1997 than in 1986, even though unemployment had fallen to below 7% and employment was growing strongly. It was only in the 2000s that the share of private sector employees worried about job loss fell below 20%.

These results suggest one reason why most people have been willing to accept or had no choice but to accept very low wage increases despite persistently higher inflation. We do not have similar time-series data on other measures of workplace fear, but if these are also higher than in the 1980s then it is hardly surprising the workforce is not pressing for higher wages as they did in previous periods of higher prices. In addition, the share of private sector workers covered by collective bargaining has fallen significantly since 1986, so the means of securing above inflation pay rises may also have diminished.

The relationship between fear of job loss and the aggregate state of the labour market is imperfect and operates with significant lags.  What goes on in the workplace is just as and possibly more important - indeed, more people were worried about loss of job status due to organisational change than loss of job. This imprecise relationship may suggest that governments get less credit for an improving labour market than might be thought.

The results also call into question the 1980s agenda being pushed by some of further reductions in some employment rights.  The only result of such measures would be to push these already high rates of fear and anxiety to even higher levels – and it is hard to see what positive purpose is served by making an already anxious workforce even more anxious.

The report does however have some positive findings. Effective employee engagement significantly reduces workplace anxieties and fears on every measure we have, sometimes dramatically. Encouraging more employers to follow these sorts of employment practices could significantly reduce workplace fears even in organisations facing job losses and significant job restructuring.

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