We know that the ability of individuals to move round the country freely for employment has been a very important part of UK life for many years. So-called employment mobility ensures that those with the required skills are able to match those skills with companies around the UK. The growth in the UK rental market ensured that in theory there would be enough rental property in any major city and town in the UK to assist those depending upon employment mobility. However, as UK house prices continue to rise, as do private rents, could this cause problems for the UK economy?
Demand for private rental properties
Even though there has been something of a lull in the buy to let market, due to recent tax rises, demand for private rental properties across the UK continues to grow. We have a situation where the trend for UK house prices remains positive, pricing many would-be first-time buyers out of the market, thereby placing more pressure on the UK private rental market. Wage inflation is also an issue because at this moment in time it is minimal meaning that average household incomes across the UK are rising less than the rate of inflation. Effectively, household incomes across the UK are losing purchasing power.
Are we headed for reduced employment mobility?
The cost of moving around the country chasing jobs which match an individual’s skill set is higher than using a permanent base. The idea is that because of perceived skills shortages in many areas of the UK employment market, the relative increase in wages would partly offset the increased cost of moving thereby making it economically viable. However, while there is no doubt we do still have skills shortages in some areas of the UK employment market, companies are struggling to increase profits, wage inflation is minimal and rental costs continue to rise
If you were somebody looking to provide for your family and forced to move to different areas of the country to take up short to medium term postings, if the financial benefits are reduced this may make you think again. On the flipside of the coin, many of those looking to utilise an employment mobility strategy have no choice if they want to maximise their skills set.
Very difficult situation
We know that the cost of living is rising at a faster rate than household income, demand for private rental properties continues to push rents skywards ensuring that accommodation costs are now a high percentage of household incomes than ever before. Employment mobility was a term which was coined by a previous Conservative government suggesting there would be numerous employment opportunities around the country for those willing to move in the short term.
In America we see companies such as Google and Amazon taking a more hands-on approach to employee accommodation and the cost of living. If we look at Seattle for instance, Amazon has effectively created a new town with its HQ campus and continued increase in employee numbers. If UK companies are unable to attract the skill sets they require in their employees they will either need to increase wages, invest in long term training or look to foreign workers.
We know that the UK government has tightened restrictions on the employment of overseas workers in the UK leaving many businesses in a difficult situation. Much of this is to do with the higher cost of living and the ever increasing cost of renting a property.