Labour market policy and wellbeing APPG on WellBeing

Labour market policy and well-being APPG on Well-Being Economics 10 th March 2014, London Saamah Abdallah Centre for Well-being nef (the new economics foundation)

Policy should seek to enhance people’s well-being: “it will lead to government policy that is more focused not just on the bottom line, but on all those things that make life worthwhile. ” David Cameron, Nov 2010 …So how does that apply to labour market policy?

Key job-related well-being determinants: • • Work-life balance and working hours Fair pay Job security Safe working environment • • Achievable, job-fit and skill-use Relations at work and with managers Control Social value

Fair pay satisfaction with life overall (1 -7 scale) 5. 80 5. 60 5. 40 5. 20 5. 00 4. 80 4. 60 0 20 40 60 80 100 120 140 Thousands Understanding Society Survey, 2009 -2010

Job security • Having a temporary contract incurs a life satisfaction penalty beyond any impact resulting from the lower income (0. 52 points biggest difference) Difference from mean life satisfaction . 10 . 00 -. 10 Permanent contract Temporary contract (> 12 months) Temporary contract (< 12 months) Temporary contract (agency) No contract -. 20 -. 30 -. 40 -. 50 European Quality of Life Survey, 2011

Job security • How likely do you think it is that you might lose your job in the next 6 months? (13% in UK say it is likely or very likely – higher than many countries) 0. 25 Difference from mean life satisfaction 0. 2 0. 15 0. 1 0. 05 0 -0. 05 -0. 1 Very likely Likely Neither likely nor unlikely Unlikely Very unlikely -0. 15 -0. 25 European Quality of Life Survey, 2011

Working hours Difference from mean life satisfaction . 20. 15. 10. 05. 00 -. 05 15 20 25 30 35 40 45 50 55 60 -. 15 Working hours • Negative effect affects over a quarter of working adults in sample • Significant effect even when excluding top income quartile European Quality of Life Survey, 2011

Work-life balance • Work/life balance is strongest predictor of stress, fifth strongest predictor of life satisfaction and third strongest predictor of overall well-being European Quality of Life Survey, 2011

Unemployment retired student employed homemaker unemployed < 12 months unemployed 12 months or more disability/illness. 0 1. 0 2. 0 3. 0 4. 0 5. 0 6. 0 Mean life satisfaction, UK 7. 0 8. 0 9. 0 European Quality of Life Survey, 2011

What are the objectives of labour market policy? Employment rate Working hours Labour market policy Well-being Job security Productivity Income

Potential applications • Minimum wage • Labour market flexibility • Working time directive

Minimum wage 9. 0 8. 0 Employment rate 7. 0 6. 0 5. 0 4. 0 Working hours Raising minimum wage Well-being Income Productivity Job security

Labour market flexibility 0. 3 0. 2 0. 1 0 th e Un. . . lik e Ve ly ry u. . . y el . - 1. 2 person Ne i Ve -0. 2 Lik i. . ry l -0. 1 - 1% Employment rate -0. 3 Working hours Enhancing job security Well-being Income Productivity + 10% Job security +0. 4 person

Labour market flexibility Worked example: Assuming everyone had life sat 7. 0 before intervention % affected WB before impact WB after People who become unemployed People who feel more secure Average well-being Increase in well-being 1% 7 -1. 2 5. 8 10% 7 0. 4 7 7. 03 0. 4%

Working time directive. 20. 10. 00 15 20 25 30 35 40 45 50 55 60 Employment rate -. 10 9. 0 8. 0 7. 0 6. 0 5. 0 4. 0 -. 20 Implementing working time directive Working hours Well-being Income Productivity Job security

Job quality ? £££ Promoting job quality Job quality Productivity Income Well-being

Questions • What would a well-being approach to labour market policy look like, and what evidence is needed to underpin it? • What are the implications for this approach for: – – Low pay – e. g. the minimum wage Job security – e. g. employment protections Working hours – e. g. Working Time Directive Job quality – e. g. promoting employee well-being