There is widespread public concern about job insecurity and the changing nature of work. Simon Burgess argues that these fears are overdone.

Job insecurity has been much in the news of late. Many commentators have heralded the end of ‘jobs for life’, predicting far greater career uncertainty for this and all future generations of workers. There are two alleged culprits: ‘trade’ and ‘technology’ – the expansion and intensification of global competition; and the pervasive presence of information technology.

But what does job insecurity really mean? In everyday use, it is a somewhat nebulous term reflecting a general fear of ‘joblessness’. Insecurity about a particular job often translates into concern about jobs in general – in other words, higher unemployment. But the rate of unemployment depends on both hiring and firing. Low unemployment may arise because jobs are held for long periods; it can also result from short-term and high rates of hiring.

The concept of job tenure is more easily measurable: in the large surveys often used by economists, job tenure means the length of time a person has spent with a firm so far. It is an employer-based rather than task-based definition.

How long do jobs typically last in Britain? Some last a matter of days, some last a working lifetime. Using data for 1990, Hedley Rees and I estimated that the average job length is about 12 years for women and 18 years for men. These are big numbers, suggesting that there is still a large element of stability in the UK labour market. While 24% of men’s jobs finished within five years, over 40% lasted more than 20 years and 24% over 30 years. For women, the figures are 41%, 18% and 12%.

Clearly, a substantial proportion of workers are in short-term jobs at any particular moment. Many have argued that this proportion has increased considerably in the past 20 years while the proportion in long jobs has fallen. In fact, the data show that this is not the case.

Elapsed job tenure was the same for women in the early 1990s as it was in 1975; for men it had fallen by about one year. The proportion of workers in their jobs for less than a year was the same in 1992 as in 1975. And while the fraction of men in jobs for more than five years was marginally lower in the 1990s than in the 1970s, the fraction was unchanged for women.

Of course, these stable overall averages may conceal offsetting changes for different groups of people. To address this issue, our recent analysis sub-divided the data into groups defined by age, education level, occupation, industry and region. The results do not overturn our broad conclusion, though there has been a more obvious decline in job tenure for men on low earnings. This mirrors their poor showing in comparisons of earnings growth.

Interestingly, the pattern of stability in the UK labour market is reflected elsewhere, notably in recent research on the US (Farber, 1995). At the same time, there are some caveats and one or two puzzles that remain.

First, jobs end for two reasons: workers leave voluntarily or they are forced out. Changes in job tenure therefore measure changes in both these factors, so it could be that a much higher rate of involuntary job loss is balanced out by fewer quits, leaving the average tenure figures unchanged. Other data on total job separations, redundancies and flows into unemployment offer no support to this argument, however.

Second, it could be that changes in long tenure groups are slow to accumulate, and are not yet apparent in the data. While this may be true, we would still expect changes at the short end (jobs of one year or less) and these have not emerged.

So why is there such a wide discrepancy between the facts on job tenure and the widespread public concern about insecurity? One explanation is that media commentators are themselves feeling insecure and they have transmitted that fear to the rest of us. Another possibility is that individuals on temporary contracts (or with less formal job protection) may feel insecure even if their contracts are generally renewed, as the data indicate.

Finally, individuals feeling worried about their jobs may be taking action to offset the perceived threats. Their insecurity may reveal itself in longer working hours, lower wage claims and the like, all of which may counteract the forces of ‘trade and technology’ to produce stable job tenure outcomes.

All the evidence suggests that jobs last about as long now as they have done for the last 20 years. But is there an ideal average job tenure? The public debate suggests that from an individual’s perspective, the longer a job lasts the better. This is partly mixed up with the distinct question of fear of unemployment, though a high chance of staying in the same job for a long time clearly reduces individual risk.

For the economy as a whole, the answer is much less clear. What matters above all for a country in the medium and long run is aggregate productivity growth. Job tenure affects this in two ways. First, long jobs are conducive to training and provide the right environment for appropriate work incentives.

But second, modern economies are continually buffeted by shocks – changes in tastes, products and production techniques – and short jobs facilitate the rapid reallocation of workers from suddenly less productive to more productive businesses. Depending on their circumstances, different countries will find a different optimal portfolio of long and short jobs.

It is often difficult to compare job tenure patterns across countries since the aggregate figures are affected by such diverse factors as industrial structure, the age structure of the population, education levels, the state of the business cycle and unemployment. These all need to be controlled for in order to isolate the contribution of a country’s institutions.

I have carried out such an investigation with Lia Pacelli and Hedley Rees, comparing the length of jobs in Britain and Italy. We found little difference in job tenure in the two countries despite very different labour market regulations and institutions. Indeed, if anything, jobs appear to last slightly longer in the less regulated UK labour market.

We estimated, for example, the chance that a 35 year old woman with average qualifications in a medium-sized firm would have a job that has lasted at least five years. In both countries, the figure is 50% in manual manufacturing work and 40% in non-manual work in the service sector. For men, the corresponding figures are 53% in Britain and 49% in Italy, and 42% in Britain and 38% in Italy.

The facts suggest that fears of a dramatic change in the nature of work and the emergence of a new industrial peasantry are overdone. Of course, the numbers reported here are backward looking: we can only look at data on the past. The world could change tomorrow but there is no evidence that it is about to. Reports of the death of jobs for life appear to be exaggerated.

Simon Burgess
Reader in Economics, University of Bristol and Research Fellow in CEPR’s Human Resources programme