216. What Are The Jobs Of The Future?

0:11Hello and welcome to The Rest is Money with me Robert Past and I'm delighted to be joined today by James Reid, who runs one of the most important companies in the UK jobs market. And there's a ton of stuff to talk to him about both the state of that market now, but also so much technological revolution that will affect the jobs market in coming years. We talk about it quite a lot on this podcast and particular, obviously, the impact of artificial intelligence. I mean, you have astonishing amounts of data about vacancies, people looking for jobs and all the rest of it. We've got this incredibly important budget coming up.

0:53Are you detecting any sort of softness in the market? Companies a little anxious about hiring ahead of what's coming? Yes, but this softness has been going for quite some time. I mean, the labour market has feature what I would characterize as a jobs drought, quite a severe jobs drought for some time. And the most telling statistic on that is the Office of National Statistics announced this week that they'd had 39 successive periods of declining vacancies in the UK, which is unprecedented. Now, I've been working in recruitment for four decades and never seen anything like that. So the number of vacancies has been steadily declining for more than three years.

1:38so we do have a labor market that's becoming very challenging for younger people particularly to come into and get a new job so it is a tough space it is a tough space and i think companies are cautious especially with the budget pending it's quite late in the year they're unlikely to sort of press the hiring button i think in a big way with the budget at the end of november they'll probably wait and see what happens and then start i hope in the new year and if we look at those 39 consecutive months of declining vacancies. Is it differentiated between kinds of businesses, or is this really across the board?

2:16That statistic is across the board. So what happened, you know, after the pandemic, there was, I would call it jobs boom, where everything opened up, people were hiring again. That sort of came to an end in the middle of 2022. And we've seen this declining situation ever since. So I would say it's across the board. There are some sectors that are more affected than others. But it's very striking because the worst consecutive periods of decline that we had before this was 16 after the financial crisis of 2008-9. So you're comparing 39 with 16. And so I'd say it's a sort of malaise that we need to try and reverse.

3:00And it's important. I mean, I don't know when it's going to hit bottom, you know, when's the last period of declining job vacancies? Would it be next period? Or would it go on for another year? I don't know. But it would be good to hit bottom. And so we can start growing again. The other thing I just should say is it's very striking, you know, to have declining job vacancies when we have ostensibly, according to the sort of data, economic growth. I know it's very sort of low level, but I've never seen that before, where vacancies continue to decline. Because in the past, when the economy started to grow, vacancies would grow.

3:35This time, we don't have that. Yeah. I mean, look, it's very lacklustre growth, even on the IMF's marginally revised up forecast. We're still, I think, talking about 1.3 % growth next year, which by historical standards is very low growth. And actually, on a per capita basis, even though we've got a government massively committed to reducing the scale of migration into the UK, there are still significant numbers coming in. So on a per capita basis, there's no per head basis, there's no growth at all. So in a way, you know, I think we've got to slightly aim off the idea that there's this growth that ought to be fueling hiring.

4:14And I guess it gets to the heart of this thing, which is when you've had such low growth over such a long time, you know, what canes, you know, would call the animal spirits, they are so dampened when it comes to bosses of companies, you know, their expectations of growth are so reduced. It is just very challenging to get them into a sort of psychological place where they think, right, I'll take the risk. I, you know, I've got so much confidence in my own business that I am now going to start to not only invest in, you know, in equipment, but also in people. Yeah, I mean, when momentum is in a certain direction, it takes a lot to shift it.

4:54I agree. So, you know, it's important that everything is done to try and tick momentum up again and reverse this declining vacancy scenario. I would agree with that. I mean, the changes that are afoot with technology, though, they offer opportunities, I mean, certainly for companies to invest and reshape their businesses. What that means for the labor market is another question. But I'd have thought businesses at the moment should be actively looking at how they can improve their service to customers by using these new technologies. That's certainly what we're doing. In our last episode, I spoke to chap called Azimazar, very interesting episode about hotly debated data out of the US, which shows that there has been a significant drop off in hiring of young people, while paradoxically, an increase in hiring of rather older, more experienced people.

5:49And one of the explanations for this is that the adoption of AI is augmenting the abilities of more experienced people, their productivity is being significantly enhanced. And the idea is that AI is replacing to an extent sort of starter jobs, which is why, you know, there's been a decline in hiring of younger people. But as I say, interestingly, companies are not scaling back employment altogether. They are hiring more older people. And I just wondered if any of this, in particular, whether you are seeing it in the UK, we have got a big problem in the UK, something like a million young people, not in education or training or work.

6:34It's a huge social problem. And I just wondered, though, on a week-by-week basis, whether you are literally seeing companies actively deciding not to recruit young people. Well, I recognize a lot of what you're saying there, Robert. I mean, I think often what happens in America comes here soon after, if it hasn't already. And we've seen in our own graduate vacancies advertised on read.co.uk, a very marked decline. So three, four years ago, we'd have had 180 ,000 vacancies a year. Last year, that was down to 55 ,000. So two thirds fall in graduate vacancies. This year, we had 33 ,000 to the end of August.

7:15So we're trending to about 50 ,000. So probably a fall of 9 % again this year. So that is very obvious to us in our own statistics. and then you have the as you described the neat number which is large and and it's it's large of a relatively small cohort of young people you know that age so it is very pronounced and it's interesting what you were saying about the um older workers maybe being more able to sort of make sense of some of ai's uh more eccentric suggestions i think that's perhaps true um because that is what you get with experience so i mean companies are not allowed or meant to you know recruit on age because that is discriminatory you know whether they're not hiring older or younger workers that's not meant to be part of the equation but um they can ask for experience obviously so that is perhaps in the picture now you're saying in your own case um you are now rolling out AI.

8:13Tell us about how you're adopting it at Reed. Interestingly, we've been using it for a long time. It's become more sophisticated, clearly, in recent years. But we started using it in our finance function to speed up processes. Probably eight, nine years ago, I remember we introduced it in our cash allocation function, And we had three or four people doing cash allocation. This is allocating the money paid into the clients that have paid it. And that job could be done by a machine we discovered in an hour and a half. So, you know, I was compelled really to make the change. And so I could see right back then that this was going to have a big impact on all sorts of jobs.

8:58And it is increasingly doing so. But we're trying to build an AI agent, which is quite exciting. and we have a beta pilot live now. It's read.ai to help people recruit. So this is particularly aimed at small businesses, time-pressed business owners who are looking for new recruits to join them. And it basically does a lot of the work for the recruiter. So instead of putting an ad and dealing with a lot of the applicants as they come in, it will bring the applicants to you. It will match your requirements to people who are potentially suited to them. and give you a short list. So it's effectively doing, or will be doing the job of an agent.

9:40I don't, I mean, it's very interesting, because it doesn't work as well as I hope it will in the future. And one of the challenges is people think, if they get a message, that it's potentially a scam. They don't know whether it's real or not, you know, is it coming from a real company or not? And this is a real problem, you know, what's true and what's not. And so they're wary of messages around his potential job that you might be interested in. And also, getting people to move often requires the intervention of a person, you know, calling someone up or suggesting that this might be an opportunity you'd be interested in.

10:16An email or a message, a digital message, often doesn't galvanize people into action. So my early sort of exploration of this suggests that AI isn't going to completely take over this work, but it will be an important contribution to it. help speed up processes and make people more efficient. How that plays out in jobs right across an economy is no one yet knows. But I imagine I'm expecting a great disruption because there's a whole lot of change coming and it's coming very quickly. No, you and I agree about this. And one of the things that worries me, actually, is I do not believe, and this is not just an issue with the British government, I would say this is an issue.

11:04The leaders of pretty much every developed economy I can think of, they are simply not preparing, whether it's the nature of the welfare system or the education system, for this really dramatic industrial revolution. You know, as I said in my chat with Azeem, that there are perfectly credible forecasts that say that within four or five years, very significant numbers of jobs currently being done by humans will be done more than adequately by effectively robots. and you know given how fractured our societies are at the moment how angry people are that their living standards aren't rising the fact that politicians are sort of going into this blindly where there could be another massive shock to people's confidence in the ability of the economy to work for them you know i it's it's so irresponsible i would argue well listening to I couldn't help but think of the 17th century philosopher Thomas Hobbes.

12:06Hell, he said, is the truth seen too late. And this seems to be one of those moments, potentially, where we urgently need to wake up to this big change. Because I agree with your sort of direction of travel there, Robert. I mean, this could be hugely disruptive on sort of a social and political level, as well as an economic one. And I can remember, you know, the 1980s and the sort of blue collar recession that occurred then. And we're seriously at risk of a white collar recession occurring now with lots of people, I think, losing their jobs. And this has massive consequences on the sort of taxation system, because income tax is such an important part of the government's fiscal take.

12:52so you know the the knock-on effects are very substantial what what do you do about it well it's very hard isn't it because you i don't think there's any way stopping this technology it's like a sort of hurricane barreling across the ocean it's coming towards us and we've got to batten down the hatches as best we can but i think the first thing that needs to be done is to recognize that jobs are important jobs that jobs mean a lot to people you know they give us dignity and purpose. So to recognize that jobs are important and do what we can to protect jobs and not tax them over tax, you know, that sort of thing, I think is a good starting point.

13:27And then I think for young people, STEM subjects is where I'd urge them to sort of focus their study and attention if they can, because those areas of the job market are still quite buoyant. You know, there are still shortages and there's a lot of demand for engineers, for instance. So there are areas, especially where the work involves using one's hands that are still recruiting actively. So, you know, there's a lot of change here. It doesn't mean that there's going to be a landscape that's bereft of jobs. It just means it will look different. But it's hard to tell at the moment how different.

14:06Sure. I mean, there are great uncertainties. And as I say, I think we both agree, a responsible government doesn't only prepare for what they think of as the central scenario, but you also prepare for the worst case, if there's a meaningful chance that the worst case will happen. You know, we didn't do that sufficiently when the financial crisis hit in 2007-8. We didn't do that with COVID. You know, this has the potential in a worst case to be genuinely devastating for millions of people's livelihoods. You know, even if that's not the central scenario, the idea that you don't put in place, you know, essentially contingencies in case is criminal.

14:42Well, I think, yeah, thinking that through carefully is certainly a very good idea. I was struck by what you said that companies are still anxious about hiring because of the negative impact or the increase in the cost of employment that the last budget's national insurance rise, the rise on employers' national insurance caused. I mean, I'm assuming that you would take the view that in the coming budget, if the government wants to see increased business confidence in hiring, the last thing it should do would be to heap any additional costs on companies at this particular moment. Yeah, I would agree.

15:23I think business took a big hit in the budget of 2024. and it was quite unexpected as well. And we've seen the consequences of that play out with hiring really becoming quite muted since. And also, importantly, this has really affected people who were doing part-time work or lower paid people because suddenly they're in the frame for employers' national insurance because of the threshold coming down to 5 ,000, which has really affected opportunities for part-time work, which is a great shame, I think. So my hope is that, you know, that business will be left alone. Of course, I think it's already smarting from what happened last year.

16:04Whether that's overly optimistic, I don't know. But I hope it's being recognized that having a very successful business sector is how we're going to raise more taxation in the future. And by sort of discouraging and putting people off investing and going to work, the result will be less revenue, not more. I also actually wanted to talk to you about another pressing issue, which is the significant rise in the welfare bill and the very significant numbers of people who are signed off work, some permanently because of disabilities of various sorts. the Tories at their last conference announced a proposal that said that they would take away welfare support disability payments to those with what they described as the milder mental illnesses so they talked about mild depression anxiety and conditions like ADHD and I had a very very you might say heated conversation with Mel Stride the shadow chancellor about this on this podcast because I said to him that even if you take the view which many people do and I think you and I would probably agree that if you're in a position to work it's a good thing to work employment is on the whole something that does you know as long as it's not complete drudgery It's something that makes most of us feel better about ourselves, the idea that we're earning and paying our way.

17:41But what I said to him is it's all very well to say you're going to take this money away from these people. But all the history of employment creation is that unless you are prepared to spend significant sums of money in helping these people to get jobs. and initially in fact if you just look back at the sort of previous Labour government's welfare to work programme also for a period perhaps subsidising the jobs themselves you know what you're actually just doing is impoverishing these vulnerable people rather than getting them into work and I said to him therefore your numbers about the amounts you're saving are not credible because in the end a humane government will have to spend money helping these hundreds of thousands of people get jobs.

18:28And, you know, for reasons best known to him, he just refused to accept the argument and just said that the existing job centre system would somehow get these people into work. I mean, I've just wondered what you think about all this, because I, you know, I would be in the circumstances of a government simply withdrawing that support. I would not have confidence that they would all, all these people, these vulnerable people would automatically find themselves in employment. I mean, the first thing to say is there are currently 717 ,000 vacancies, according to the Office of National Statistics in the UK at the moment.

19:01And there are 9 million people who are economically inactive. So there's not enough work for everybody, even if they took that route. And so the first thing that would be required is to really get the economy going and stimulate growth so that there are more jobs coming through and more opportunities for people. I mean, we've worked at Reid, we have a business called Reid in partnership. We've worked since 1998 with people who've been unemployed, helping them get back into work. We started off in Hackney with young people on the New Deal with the last Labour government. And what I've observed over that time is almost everyone who we deal with wants to get a job.

19:40You know, they're not sitting around at home. Some are, but the vast majority want to get a job and want to get going. And they need a bit of support. You know, if they have one-on-one support and a good personal advisor who helps them develop their CV, prepare for an interview, think about where they should be applying. Their prospects for success are far improved. So that is necessary. But that investment, if it's well made, pays off in the years afterwards because they're not claiming benefits and they're paying taxes. You can't do it for nothing, can you? No, no, but it's an investment. So, you know, we need to invest in getting the economy going and we need to particularly invest in people because that's the country's ultimate asset and that's what we care about.

20:25So investing in the people in the country needs to be done in a number of ways, whether it's education or if it's afterwards through programs like this. But they pay for themselves. You know, there's a big program at the moment called Restart. All the evidence suggests it covers its costs in benefits saved and taxes paid. We'll go to a break in a minute, but there's just a couple of other issues around all this that I'm interested in your views on. One was, you may have noticed that the Prime Minister Keir Starmer at Labour's conference made this declaration that the target of the government would no longer be 50 % of young people to go to university, but two-thirds of people to go to university and or apprenticeships, skills training of various sorts.

21:13He's addressing this thing that we talk about a lot on this programme I've been a subject of debate in this country for as long as I've been alive, which is the so-called hierarchy of esteem between academic and non-academic education. I mean, presumably, you would agree that non-academic education has been not valued enough in this country and we need to do more of it? I did take note of the Prime Minister's remarks. I mean, he said 66 % would do degrees or, as he put it, gold standard apprenticeships. I mean I'm not sure how that mix will work out between so I had a few questions in my own mind arising what about the other third who don't do degrees or gold standard apprenticeships and where are these gold standard apprenticeships because there aren't very many of them at the moment it's part of the problem yeah and what what is a gold standard apprenticeship and and how's it put together but um overall I think it's a welcome statement because we're seeing in our business a lot of people graduating from university who've spent a lot of money and a lot of time on a degree that doesn't help them much in the labor market.

22:16And they often end up straight on an unemployment program. So, you know, that is not helping the individual or our society in the way that we would like. So I think having degrees that are perhaps more vocational in focus for a lot of young people make sense and gold standard apprenticeships is a good idea if we can make it work, because there are huge numbers of trades that are really short of people. And these are good jobs you know if we have a we we have an energy academy where we teach people retrofit skills and if you become a retrofit engineer you can earn a lot of money and you're going to be busy for years because of the climate crisis and buildings needing to be retrofitted so there are lots of route ways i think that need to be developed i really don't like that sort of what what did you call it a hierarchy of educational hierarchy of esteem in education i I mean, I think, you know, we should not value one kind of degree more than a different kind of, you know, apprenticeship training or whatever.

23:19There should be no hierarchy of esteem. No, there should be what we should be looking at is creating root ways for young people into a happy and successful and productive life. And that might be degrees to some. It might be gold standard apprenticeships for others. It might be other forms of training or work experience for others. But every young person should be, no one should be left behind like that. There should be a strategy socially for every young person when they leave school to progress, not be left behind. Now, one of the many would say the weaknesses of the British economy was that we became as an economy or the economy became sort of addicted where there were skills shortages or even shortages of non skilled people.

24:04We became addicted to immigration, to getting those people and skills from abroad. And where do you stand on this debate about, I mean, it's become a huge, you know, probably the most politically sort of important issue of this particular moment. Let's just focus on visas and legitimate immigration. What is your view about what the government should be doing in this space? Well, I've got a couple of suggestions. I mean, the fact that I think it's called the Boris wave, you know, there was a huge increase in legal immigration, 3.8 million people, I think, issued visas since 2020. And you put that in a context of 717 ,000 job vacancies.

24:57I mean, it's not about helping fill business requirements or jobs as it used to be. You know, when the Windrush generation came, it was to help rebuild the country after the Second World War. And there were lots of jobs. This is an entirely different situation. It's politically very complicated and difficult. My suggestion would be to have a moratorium on issuing visas just to stop doing it for a bit and sort out the backlog of all these people who have entered the country, you know, on small boats or illegally and process all the people that are here now. The worry, the reason governments have not done that is they've been frightened that, you know, successful and important businesses would be in serious trouble.

25:43I think if you look at the last sort of few years of immigration, only about 15 percent of those 3.8 million were actually going into work jobs. You know, there were all sorts of other categories of students and family members. So I think they would cope. Yeah. And I think if we had, say, a two-year moratorium on issuing visas, if it's possible just to issue them, it must be possible to stop issuing them. It gives the country time to evaluate what we want to do next. And with an election coming up in the latter part of this decade, the different political parties can pitch what they would propose for immigration for the future to the electorate.

26:24Because the other problem is the electorates never had an open choice. I mean, this just happened. So the public feel they haven't been consulted on this. So I think if there was a moratorium and then policymakers could come up with their preferred options and different political parties could put that to the electorate and the electorate could decide at the next election. I don't know. That would be a simple way. It might mean that some businesses are complaining they can't get some specific types of expertise. But when you think there are 70 million people in Britain and there are 9 million of them are inactive and there are 717 ,000 vacancies, I mean, we must be able to sort that out internally.

27:05Yeah. I mean, I think the issue just is, I mean, the problem we've always had in this country is making sure that the skills are in the right place. And, you know, one of the things that this government has not yet done is, which it did promise to do, is it did in the run up to the election say it would, you know, it would empower, for example, the metro mayors to have a much greater role in determining the skills needed in their areas, including the training. And I think, you know, simply matching, essentially making sure the indigenous population has the kind of skills that the businesses require is plainly an absolute priority.

27:38But let's go for a quick break and pick up after the break with the question of how do we create, you know, what we might call good companies. See you in a second. Seit Torben über Flatex traded, fühlt er sich wie Torben Gecko. Für alle, die wie Torben Börse im Blut haben. Jetzt Kapitalertragsteuer komfortabel und vollautomatisch abführen. So geht steuereinfaches Investieren. Flatex. Besser richtig handeln. Investieren birgt Verlustrisiken.

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28:54In a matter of hours, people were using AI as a super assistant, instantly unlocking productivity gains. They were using it to write documents, crunch numbers, brainstorm and even role play new business ideas. If every SME in the UK gained those three weeks, that's a serious lift to job satisfaction, innovation and national productivity. Just one example of how Google's AI is fueling growth and transformation. Find out more at goob.go.com slash AIworks. You've got a book coming out which looks at the ownership structure of companies. And you've got a very specific proposal to change the ownership structure in a way that might reinforce confidence that companies are here to do good.

29:44Yes, thank you, Robert. Well, the book that I have coming out is called Karma Capitalism, and it comes out on the 6th of November. And the message of the book, I mean, what it's seeking to do, and it sounds quite grand, but it's to change the DNA of capitalism by changing the DNA of the corporation, and that's changing the ownership structure. And this is something we've stumbled upon really at Reed, because our business is 18 % owned by a charitable foundation. And that means we work one day a week for charity, and the proceeds of that work in terms of the dividends that are paid out by the business go into all sorts of social, community and environmental causes.