Are We Creating A Two-Tier Economy?

The division of the economy into high-skill, high-pay and low-skill, low-pay jobs is increasing levels of poverty and inequality. The effects of technology and the internet have destroyed many traditional jobs and the trend looks set to continue, as the digital economy grows stronger and expands into all areas of business.

The types of jobs created in the new economy provide high pay but demand high levels of skill that, in turn, drives down pay levels for those without the required skills.

As a result, it is necessary to examine what can be done to arrest the development of an economy in which poverty and inequality become the norm for some people.

One area where help can be provided is in relation to providing careers advice to ensure young people identify relevant jobs and gain the training necessary to apply for such jobs.

Once in work employers need to provide further training and development opportunities to enable employees to improve their skills and build a career.

Employers also have a role to play in attracting and engaging more young people in order to develop a pipeline of future talent and recruitment.

To understand what is happening and why, it is useful to consider the drivers behind the drift towards a two-tier economy.

The low economic growth of recent years coupled with falling public expenditure and the effects of technology are putting pressure on costs, as companies cut overheads and make savings.

The response of some firms is to reduce employee training and treat labour as a commodity for purchase at the lowest price without the need for long-term investment or commitment.

In this scenario, a company competes on a low cost basis driven by low wages, little commitment to training, few opportunities for progression or promotion and an acceptance of a high staff turnover rate.

The response of other firms is to invest in training but only for those employees with high-level skills in areas of demand, as a way to retain people and remain competitive.

In this scenario, the company competes on a skills basis driven by high investment in people and technology and a commitment to training and the development of its people.

SO, as the economy recovers from recession the challenge is to ensure that everyone benefits.