Labour market policy and well-being

APPG on Well-Being Economics10th March 2014, London

Saamah AbdallahCentre for Well-beingnef (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-beingdeterminants:

• 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

Understanding Society Survey, 2009-2010

0 20000 40000 60000 80000 100000 120000 1400004.60

4.80

5.00

5.20

5.40

5.60

5.80

satisfaction with life overall (1-7 scale)

Job security

• Having a temporary contract incurs a life satisfaction penalty beyond any impact resulting from the lower income (0.52 points biggest difference)

Permanent contract

Temporary contract (> 12

months)

Temporary contract (< 12

months)

Temporary contract (agency)

No contract

-.50

-.40

-.30

-.20

-.10

.00

.10

Diffe

renc

e fr

om m

ean

life

satis

fac-

tion

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)

European Quality of Life Survey, 2011

Very likely Likely Neither likely nor unlikely

Unlikely Very unlikely

-0.25

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

Diffe

renc

e fr

om m

ean

life

sat-

isfac

tion

Working hours

15 20 25 30 35 40 45 50 55 60

-.15

-.10

-.05

.00

.05

.10

.15

.20

Working hours

Dif

fere

nce

fro

m m

ean

lif

e sa

tisf

acti

on

• 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

European Quality of Life Survey, 2011

• Work/life balance is strongest predictor of stress, fifth strongest predictor of life satisfaction and third strongest predictor of overall well-being

Unemployment

disability/illness

unemployed 12 months or more

unemployed < 12 months

homemaker

employed

student

retired

.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

Mean life satisfaction, UK

European Quality of Life Survey, 2011

What are the objectives of labour market policy?

Well-being

Employment rate

Job security

Working hours

Income

Labour market policy

Productivity

Potential applications

• Minimum wage• Labour market flexibility• Working time directive

Minimum wage

Well-being

Employment rate

Job security

Working hours

Income

Raising minimum wage

Productivity

4.0

5.0

6.0

7.0

8.0

9.0

Labour market flexibility

Well-being

Employment rate

Job security

Working hours

Income

Enhancing job security

Productivity

- 1%

+ 10%

- 1.2 per person

+0.4 per person

-0.25-0.2

-0.15-0.1

-0.050

0.050.1

0.150.2

0.25

Labour market flexibility

Worked example: Assuming everyone had life sat 7.0 before intervention

% affected WB before impact WB after

People who become unemployed 1% 7 -1.2 5.8

People who feel more secure 10% 7 0.4 7.4

Average well-being 7 7.03Increase in well-being 0.4%

Working time directive

Well-being

Employment rate

Job security

Working hours

Income

Implementing working time

directive

Productivity

15 20 25 30 35 40 45 50 55 60

-.15-.10-.05.00.05.10.15.20

4.05.06.07.08.09.0

Job quality

Well-beingJob qualityPromoting job quality

Productivity

Income

£££ ?

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