By Annie Hayes, HRZone Editor
Official statistics out this week show that movement in the labour market has reached its lowest ebb – employment is high but the number of unfilled vacancies is up; Editor’s Comment examines how the nation’s obsession with home-ownership is restricting the passage of skills and workers.
Two thirds of us are home-owners; only one person in ten rents from the private sector.
But as Andrew Oswald, Professor of Economics at Warwick University writes in the Times, it didn’t always used to be this way.
“After the end of the Second World War most Britons went to their beds in privately rented accommodation.”
So what has happened? It seems that the old adage ‘An Englishman’s home is his castle’ has come true and once ‘in’ the nation’s workers have a tendency to stay put.
Interest rate rises have also hampered further movement. The much-enjoyed property boom, fostered by remarkable tax breaks ensured property shot up in value ensuing much buying and selling.
Now the market is steadying, helped by the Bank of England’s rate rises we’re seeing a pattern whereby more people are staying put and choosing instead to renovate their homes rather than move up the property ladder.
I asked the Chartered Institute of Personnel and Development what their thoughts were. John Philpott, Chief Economist told me that a lack of rented housing was partly to blame for the tight labour market:
“A lack of rented housing is pushing people towards home-ownership. In addition – high rates of council housing can cause difficulties, adding further restrictions to mobility.”
Oswald points to comparators across the pond.
“In the 1950s, the United States had a high owner-occupation rate of 60% and the highest unemployment in the Western World.”
In fact Oswald is so convinced that home-ownership is putting the brakes on mobility he goes as far as to say: “Home ownership tends to damage the labour market. Because selling a home is expensive, owner-occupiers are less mobile than renters and consequently more vulnerable to economic downturns in their region.”
West Virgina, he says in the United States has historically tended to be the state with both the greatest unemployment and home-ownership levels.
Halifax, the leading mortgage lender, however, rejects these findings. A spokesperson told me that in fact Britain doesn’t top the league for home-ownership in Europe.
“Sixty-nine per cent of property in the UK is owner-occupied but this compares to Spain for instance at 81% and Bulgaria at 96%,” they said.
But as Oswald says in Spain, there is the widespread problem of young unemployed people living at home, unable to move out because the rental sector barely exists.
There the difficulty, he says is not that unemployed people are home owners; it is that the unemployed cannot find accommodation in towns where there are jobs.
Rental accommodation in Britain is also in short-supply and has been a major contributor to escalating house prices.
The problem we are seeing is that young workers are being priced out of the market, in most cases a 10-15% deposit is required and with the average price of a house now £160,000 young workers have a lot of saving to do if they are to get their feet on the ladder.
This in turn causes a further problem, workers may now be going to areas where property is cheaper, but these aren’t necessarily the areas where work is.
Age is also playing a part.
The Halifax say that home-ownership is only shackling those in their mid-thirties:
“I would suggest that in the early years, people are happy to move around for jobs. The average age of a first time buyer has for the last few years been 34. There are a couple of reasons for that. Anecdotally more people go to University than ever before and they therefore enter the labour market later, people also marry later and marriage is often a trigger point for buying a home. Young people tend to therefore be happy to move around in the early years while they establish their careers.”
But what we are seeing are unfilled vacancies, or worse still, workers doing jobs for which they are not ideally suited. So while younger workers may indeed be more mobile they often don’t offer the skills or experience base much sort after by employers.
It seems as though a vicious-cycle is in full swing and until steps are taken to reform the housing market, employers will continue to battle it out in the war for talent but it may not be the competitors that are winning but bricks and mortar.