What economic strategy should the UK pursue over the next decade, in order both to address long-standing problems in the country (stagnating living standards and high inequality) and to navigate ongoing change (Brexit, net zero transition and a post-pandemic world)? The Economy 2030 Inquiry is a two-year collaboration between the Resolution Foundation and the Centre for Economic Performance at the London School of Economics investigating this very question. Drawing on evidence about how people, places and firms flourish, the Inquiry aims to provide a roadmap for a more productive and equitable UK in 2020s and beyond.
This report is unlike the majority of research produced by the Inquiry to date, however, in that it is based on the voices of 56 participants from six semi-structured focus groups we held in March 2022. We created this space in the Inquiry to listen to people from all walks of life voice their experience of the economy for a range of reasons. This exercise allowed us to test if what we have found in the Inquiry so far truly reflects people’s lives, and to probe motivation, explore constraints and understand how people engage with, and experience, the world. Most importantly, these voices are key in helping us decide not just the objectives for a new economic strategy, but also which routes to change are desirable and feasible.
This, then, is what we heard.
Work plays a huge role in most people’s lives: three-quarters of working-age adults are in some form of paid employment, and almost everyone will have worked in the past, will work in the future, or live with other people who work. Although pay matters a great deal, our focus groups made clear that work was not valued just for money alone. Other considerations were important to people too in determining both the choices they make about jobs in the first instance, and their day-to-day experience of work.
Three aspects of a job were highly prized. First, participants were clear that work was rarely their be-all and end-all, and they wanted (in some cases needed) jobs that gave them the flexibility to succeed outside work as well. Second, people valued variety, or conversely, disliked the repetitive elements of their jobs. Being able to mix and match tasks at work made for a better experience, a finding consistent with studies that show autonomy is linked to job satisfaction. Third, purpose and meaning at work was key. Many higher earners and public sector workers had jobs that explicitly provided this. But others also found value in helping others or working alongside colleagues, suggesting that many jobs can be highly rewarding when structured well.
On the other hand, ‘bad management’ was a common cause for complaint in our focus groups. We found that this largely meant two things. First, for some, bad management was about lack of care and meaning: just as most enjoyed the human elements of their work, they disliked systems (and colleagues) that dehumanised them. Second, participants often complained about being driven too hard by management, consistent with studies that have shown rising work intensity in recent years. Critically, many noted that bad management was not just unpleasant but also made them less effective at work. They are not wrong: one estimate suggests that management practices account for around one-quarter of gaps in total factor productivity both within and between countries.
Lower earners in our groups were more likely to report a lack of control over key aspects of their working lives than the higher paid. Whether it was the number of hours they worked or their working pattern, their ability to resist poor practices or ask for a rise, lower earners were at a disadvantage. This is in line with existing evidence on worker power showing, for example, that low-wage workers are three-times less likely to be able decide when they start and finish their working day as high-wage workers. Higher-earning participants in our groups highlighted two key mechanisms through which they exercise their superior power. First, they had good access to senior decision-makers; second, they sometimes felt able to threaten to quit, confident that they would not be that easy to replace.
Current debate often foregrounds the risk of job loss that can accompany economic change, a prospect that was alarming for the higher earners in our focus groups. In part this reflected a belief that benefits system would not have their back – an accurate assessment given how low unemployment benefit replacement rates are for middle and higher earners in the UK today. Moreover, higher earners were anxious about finding an equally lucrative new role (again, a sensible fear given what data tells us about pay downgrades in the wake of involuntary job loss). But these sentiments also acted as a brake on voluntary job moves for higher earners: they were concerned at finding a job that would be a ‘good fit’, and reluctant to give up benefits such as flexibility that came with longer tenure in their existing role.
In contrast, lower earners in our focus groups were mostly unperturbed by the prospect of losing their jobs: they saw their skills as transferable and felt they would pick up work soon enough (most likely reflecting the strength of the labour market at the time our groups were held) . But change essentially looks like more of the same for those on low pay, with little incentive to make a voluntary job move given the barriers they encountered in improving their lot. We heard how better-paid jobs frequently required a university degree or extensive experience for example – and although many were willing to undertake training to improve their prospects, the financial support to help them do so was often unavailable.
Not all are in paid work, but almost everyone experiences and shapes the economy through the goods and services they buy. When we asked which factors people took into account when spending, price came top of everyone’s list. Our focus groups convened at a time when the cost of living crisis was intensifying, and those on lower incomes in particular spoke eloquently of their fears about making ends meet and coping strategies they employed. Moreover, the fact that prices were changing rapidly made it far more difficult to budget above and beyond the fact that price levels were high. But those on higher incomes were not oblivious to rising prices. Even though the trade-offs they were making were far less acute than those made by lower income families, they, too, reported a growing sense of economic insecurity.
Across the board, people felt they had a good level of choice for most goods and services helped, of course, by the rise of internet shopping. We place two caveats on this finding, though. First, all our groups were held in urban areas: those in a rural group may perhaps have disagreed. Second, no-one in our two consumer focus groups was on a very low income which clearly would severely constrain ones’ ability to pick and choose in the marketplace. Participants were clear that choice was important not just for its own sake, but also for keeping prices down especially for essentials such as food. In their view, lots of options means they can shop around for the best deals, and that providers have to keep prices down because of competition.
Price was not the only consideration for consumers however, and even those on tight incomes were keen to ‘do the right thing’. Strikingly, buying local was the number one social consideration that participants raised in our consumer focus groups. Many were prepared to pay more if money went into the local economy and with an obvious feed-through to local people. However, a clear tension was apparent (and acknowledged) between the convenience and choice online shopping offers, and the much-lamented decline of local high streets and town centres.
Beyond the local, our focus group participants cared about other impacts of their purchasing behaviour. Environmental concerns were often uppermost– both in terms of buying sustainable products, and reducing unnecessary consumption to limit waste. Interestingly though, participants saw ‘green’ consumption less through the lens of saving the planet, and more through the lens of getting quality and longer-lasting products.
Finally, consumers were – at least in theory – open to the idea of paying more if it meant higher pay or better conditions for lower earners. But crucially, people were suspicious of whether the higher prices they might pay would be passed on to workers, and did not want to have to take responsibility for sifting through information to make ethical consumption choices of this nature. Instead, they wanted government to step in to ensure that workers in shops, services and supply chains all received a decent minimum wage and good working conditions.
As our participants told us many times over, their lives are about far more than just work and spending. They were outspoken about how important parenting, supporting other family members, and participating in their broader communities were to them. Whether it was spending time with one’s children or mowing a sibling’s lawn, recording the memories of one’s grandmother or baking for an elderly neighbour, our participants gave us real insight into the contributions they make to the social fabric. Moreover, leisure activities were often framed in our discussion as much-needed replenishment in order to care better for others.
Of course, these activities have value not just for people’s sense of self but for the economy even if they are not captured by the most commonly used economic indicators – in 2016, for example, unpaid work was estimated at around £1.2 trillion, or 63 per cent of GDP –. When it came to helping people outside of family, our participants were very clear that their actions had benefits for the economy (for example, saving the NHS money by supporting others through difficult periods of mental health). But the wider societal and economic value of the significant amount of parenting and other family care that most of our participants did was not always apparent to them. Although some very clearly saw the support they provided to children and other family members as having extrinsic as well as intrinsic value, others did not view it in that way until prompted.
Interestingly, we found that lower-income participants – both working-age and pensioner-age – placed economic greater value on activity outside of paid work, such as volunteering and supporting others in their own family and beyond, than higher-income participants. This sometimes reflected their lower engagement with work compared to higher-income individuals, who were more likely to report that they were active participants in the economy both at work and outside of work. For example, many of the people we spoke to who were not working were particularly generous in supporting their neighbours or communities.
In many respects, our focus groups provided an upbeat account of life. It was noteworthy (although unsurprising) that higher-income participants were more likely to report varied, and costlier, activities especially with their children, but lower-income participants generally felt they were able to fully participate in society too. That said, some in our focus groups had passed through very tough times. Reflecting back on periods of very low income, they were clear that life was very limited when money was extremely tight. Likewise, our participants pointed out that poor health or caring for someone else with a health condition or disability often severely curtailed their sense of freedom.
When circumstances change for the worse – whether that is losing a job, seeing the price of essentials rise or the onset of poor health – people frequently said that they would turn to support from family and friends. But the state is there to provide a safety net in times of need too. Given that multiple studies have shown that the level of support available for working-age people through the benefits system has become significantly less generous over time, it was no surprise to hear that participants in our groups who receive some of their income as benefits were finding life very hard. But it was not just the benefits system that was seen as inadequate: across our groups, people noted that key public services, such as support for those with mental health problems, seemed to be coming apart at the seams. Fixing public services to relieve pressure on those with caring responsibilities and keep people in the best of health were popular calls in our focus group discussions. But despite often harrowing accounts of life on benefits, and direct experience some in the groups had of this, there was surprisingly little spontaneous support for improving benefit adequacy.
The UK’s shared prosperity model is broken: growth is low and and inequality is high. . We need a new economic strategy, but unless this is attuned to people’s lives and what they truly value, it risks solving the wrong problems or setting off in directions that are unlikely to succeed. Strikingly, no participant in our research felt they had the ability to affect economic change – economic change is currently done to people rather than by or with people. So, what can our focus groups tell us about how the country needs to change?
Anxiety about the cost of living crisis was widespread across our groups. There was a growing sense of economic insecurity even from those higher up the income scale, indicating that protecting and improving living standards is an increasingly urgent task. But, clearly, sustained growth in living standards cannot be achieved without improvements in productivity, so how is that to be achieved? Our focus group point to some strategies. Further intensification of work for lower earners is unlikely to produce much in the way of gains (a finding consistent with our previous work), for example, but more flexible work and better management practices very well might.
A more productive economy also requires a dynamic labour market, but we found real impediments to workers’ ability to grow and change jobs. For many lower-skilled workers, change often looked just like more of the same. This suggests that clearer routes for progression and training are needed to help people escape often unfulfilling jobs. In contrast, higher-skilled workers need more support to take a leap, such as better social insurance to catch them if they fall, or improved and standardised labour market conditions around flexible work.
When it came to the cost of living, competition is clearly key to keeping prices down, but lower-income families also need protection against rapid price increases. Moreover, if consumer behaviour has to change in the future – for example, to reach our net zero goals – our focus groups suggest this can only be achieved through regulation or price signals rather than expecting consumers or firms to make complex ethical choices themselves.
A flourishing economy underpins the things that are important in people’s lives: providing for their children, for example, or a thriving local community. (We will be examining people’s views on their places in more depth in forthcoming research). But our focus groups showed clearly that very low incomes and poor health are the biggest barriers to full participation in society. As we look to the future, we need to find a fair and sustainable way to fund a stronger benefit system and better public services.
Developing an economic model to achieve all these and other aims is not without its challenges. If we want better-paid and better-quality jobs, we will need businesses that are willing and able to provide them. It may prove hard to reconcile consumers’ desire for both the choice of online shopping and a vibrant local high street. And providing more social protection and better services – for example, more subsidised childcare or improved mental health provision – has to be paid for somehow.
This report is the first providing us with deep insight into people’s experience of the economy. In the next phase of the Economy 2030 Inquiry we will work once again with members of the public to explore these and other trade-offs further, and develop policies that underpin shared prosperity.
For now, though, we give the last word to one of our participants.
“The system needs to change and the people like us … who’ve gone through it, our views are so important to try and make that change.”
Participant living on a very low income, Sunderland
For all research queries about this report, please contact Karl Handscomb. For press queries, please contact the Resolution Foundation press office.