PwC: Digital era shaping jobs and UK labour market

24 March 2015 5 min. read
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The greatest increase in new UK occupation titles between 1990 and 2010 were in digital occupations, according to PwC, with the proportion of the workforce employed in occupations whose title came into existence after 1990 growing to 6% across the UK. Although digitalisation has created numerous jobs in the past 10 years, the report also highlights that in terms of the future, long term employment growth is set to decrease between 2014 and 2024 compared to the period from 2004.

Digital technology is transforming many aspects of human society, from mobile connectivity on the go to the way we shop. In a recent report from PwC, the positive changes to employment from the changes are considered.  The research was completed in association with Carl Benedikt Frey of the Oxford Martin School at Oxford University, and is titled ‘New job creation in the UK: which regions will benefit most from the digital revolution?’. The study looks at the new job titles that have come into being in the last decades, with most related to digitalisation, as well as look at the proportion of UK workers now employed in position opened up by digital technology. 

Top 10 new occupations

New occupations
Of the new occupational categories added since the computer revolution starting in the 80s, 8 out of 10 saw the strongest increase in new job titles related to digitalisation. Of new job titles coming into existence in an occupational category between 1990 and 2010, Computer Software Engineers saw an 80% increase, Database Administrators a 78.6% increase, Network and Computer Systems Administrators 78.1%, while Computer Hardware Engineers saw a 50% increase in new job titles since 1994. In terms of where the new positions have been created, primarily professional and associate professions positions are seeing the increase of a digital workforce, making high-skills key to success in this transformation.

While a whole host of new occupations have sprung into existence, PwC notes that technology is not only creating new – often high skilled – employment but is also making occupations redundant in the process. This observation is shared by Deloitte, which recently reported that automation could see a third of UK employees lose their job. With at issue that many of the new tech start-ups have created relatively few new jobs, compared to the giants of the early computer revolution. For instance, Facebook for its huge disruptive force only has around 9,199 employees after 11 years of existence.

Employment in new types of jobs

Employment growth
In terms of the positive effect on employment generated from the revolution, in 2004 5.5% of the UK workforce was employed in job titles that did not exist in 1990, which by 2014 had grown to 6%. While the UK-wide picture has 6% of the population in a tech job, there are significant regional differences. Particularly Central London has a considerable number of people employed in tech, with the Northern Region the fewest. In 2004, the number in the Central London area was 8.2% of workers, with the lowest proportion, at 4.1% in Rest of Northern Region. By 2014, Central London stood at 9.8% of all employment while Rest of Northern Region was up above 5%. The only area to see a decrease was the Rest of Yorkshire & Humberside, which witnessed a small decline from 4.8% to 4.6%.

Proportion of workers in new types of jobs

The digital future
PwC explores the trend from 2004 in employment growth and the share of new types of employment, using a simple ordinary least squares (OLS) regression. The firm examines the statistical relationship between new work creation and employment growth, to project a possible future for the UK employment market. The main finding, according to the report, is that the share of new types of jobs in 2004 is a statistically significant predictor of subsequent total employment growth in a region. The researchers further find that the share of new types of jobs can explain about 50% of the variation in employment growth across UK regions over the last decade.

According to the projection, employment levels in Central London that have grown 35% between 2004 and 2014 will grow a further 25% in the coming decade. Inner London (excluding the Centre) has grown 20% since 2004 and will grow 12.5% in the coming decade. Northern Ireland too has seen significant gains in recent years, with an around 14% gain since 2004 and expected growth of around 5% in the coming decade. Over every region, growth of between 5-10% is projected, with Rest of Yorks & Humberside showing the least movement at around 2.5%.

Projected employment growth UK regions 2014-2024

Commenting on the results, John Hawksworth, Chief Economist at PwC and co-author of the research, says: “Employment is projected to grow more slowly than in London in other regions, but some show notable accelerations in projected growth over the next decade as compared to the past decade, including Greater Manchester, West Yorkshire, Merseyside and the West Midlands.” Frey expresses his concern that infrastructure bottlenecks in the London region might influence the capital’s ability to foster further growth. To solve this, “increased investment in transport infrastructure is needed to facilitate continued diffusion of new jobs across regions, while also making sure that the growth of London is not constrained by the supply of housing.”