Amongst all the competing predictions about what the future of work might hold, the challenges of achieving decent work in the foundational economy have been largely overlooked. Here, Dr Mat Johnson and Dr Eva Herman argue that the focus should be on making tangible improvements to the working lives of those in the frontline roles that keep our communities fed, educated, safe, connected, and cared for.

• Frontline roles are underpaid and undervalued – and many countries including the UK face significant shortages of workers to fill these roles.
• A real living wage for workers is needed along with training and development opportunities.
• A greater recognition of the social and economic value of foundational economy jobs begins with a ‘bundle’ of progressive human resource management practices.

Visions for the future of work

Debates on the future of work have tended to align with one of two positions. The first offers a broadly optimistic vision of increasingly high-skill/high-wage jobs in the ‘frontier economy’ closely tied with technological advancements and productivity gains. In this scenario, work potentially becomes more condensed but better paid (leaving more time for leisure and education) with dangerous and monotonous tasks simply handed over to machines and AI.

The second, more pessimistic, vision of the future of work points to large scale job destruction and displacement as automation and new technologies make certain roles and skills obsolete. Some jobs such as entry-level office and sales roles, and some transportation roles, are predicted to disappear entirely from the labour market within a generation.

Regardless of whether we align ourselves with the optimistic or the pessimistic vision, this kind of crystal ball gazing around the future of work distracts us from understanding the challenging ‘now of work’ in the large, but often overlooked, foundational economy. The foundational economy (FE) encompasses many frontline health, social care and emergency services, along with education and childcare, retail, transport, energy, and utilities.

The significance of the foundational economy

Although its component parts may seem somewhat disparate, the FE is significant and directly provides jobs to more than 40% of the UK workforce. In contrast with some professional and technical roles, many jobs within the FE are less at risk of displacement and automation in the near future. The everyday activities within the FE are by their nature localised and difficult to offshore given that the point of production and consumption are geographically ‘tethered’ within communities and neighbourhoods.

Although technology will undoubtedly change the way in which people work, the International Labour Organisation predicts that human health and social care is one of the few growth industries that can create jobs that are inherently low carbon. Growth in health and social care could also reduce the burden of unpaid care that falls mostly on women.

However, many countries are already facing significant shortages of workers to fill these roles. In the UK, for example, at the end of 2022 it was estimated that there were 165,000 vacancies in social care (up by 52% from the previous year), and the turnover rate was close to 31%. Similarly, in Early Childhood Education and Care (ECEC) turnover rates have been estimated at around 28% in the private sector, and providers report running at below capacity because they are short-staffed. Many workers are leaving frontline care and early education for retail jobs that pay similar (or even better) rates of pay but with fewer of the physical and emotional demands.

Skills, productivity and value

Part of the reason for high turnover and vacancies is that such roles continue to be low paid and under-valued. Median wages in elder care are around £11 per hour and in ECEC are around £10 per hour. Workers report being paid the minimum wage for most of their careers.

The conventional economic explanation is that such jobs are considered ‘low skilled’ and ‘low productivity’ – but the economic value of the FE is significant. Health and education alone account for around 6% of Gross Value Added (GVA) for England overall, and around 8% of all employment. However, productivity gains are notoriously difficult to achieve in these ‘high touch’ roles without simply cramming more clients into carers’ schedules or asking employees to work off the clock. A stronger explanation for persistent low pay is the gendered pay norms that surround many caring jobs, combined with long-term underinvestment in public services.

Policy recommendations

While growing the frontier economy will be important for the future prosperity of the UK, we need to make careers in frontline health, education and social care more attractive now if we are to avoid a worsening crisis of poor-quality work and patchy services.

Job quality involves a ‘bundle’ of progressive human resource management practices, such as good working conditions, employee voice, and long-term training and career progression routes, which employers often want to adopt but typically lack the necessary resources and expertise. Recent reforms to the care system in Germany have put more money into frontline services while also providing pay increases of 18% for entry-level social care staff and 22% for fully qualified care staff. Similarly, the proposals in Scotland for sector-specific minimum wages of £12 per hour in both early years and elder care are designed to address chronic staff shortages. These investments combined with support for long-term training and career development will promote workforce quality and sustainability, and aim to reduce the recurring costs of high staff turnover.

Better funding for universal basic services, along with a real living wage for workers would help tackle some of these short-term problems, while also providing a platform for a more equitable distribution of earnings in the future. Quebec has shown the importance of reforming the childcare and early education sector to make it more affordable for parents while also improving conditions of employment. Parents pay a flat daily rate of $8.75 for a pre-school place, with pay and conditions of employment collectively negotiated. This ‘universal’ provision led to a substantial rise in labour market participation of women with children aged 3 and 5 from 67% in 1998 to 82% in 2014, and with it a rise of  1.7% in GDP that more than recouped the upfront investments.

High profile pay disputes have highlighted the problem of sluggish wage growth within the health and education sectors, but early childhood education and care and elder care services are often funded from local authority budgets – which have been squeezed significantly since 2010. While individual local authorities have attempted to model good practice through their own commissioning and procurement practices, coordinated reforms are needed to raise the status and social valuation of the caring profession. This would send a powerful signal that jobs in the FE are valuable to society as well as the economy.

This article was originally published as part of our collection on the future of work in the UK, Working Futures. Read more evidence-led policy insight on this topic in the full online collection.