Occupational regulation and social mobility in the UK

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This think piece is one of a series, which explores some overlooked topics in social mobility policy debates. Occupational regulation is a form of labour market regulation which determines who can provide a specific service or enter a given profession. And it may be a more important factor in shaping opportunity than has been acknowledged.

There are a range of policies aimed at improving social mobility, and a great deal of focus is currently given to achieving a wider mix of socio-economic backgrounds (SEB) in the professions. This work almost exclusively focuses on changing the socio-economic mix on elite pathways, by improving access to high-ranking universities and access to the professions for those from lower socio-economic backgrounds. One example of this approach is the promotion of contextualised admissions in terms of education and contextualised recruitment into specific occupations. However an overlooked topic is the role occupational regulation has on social mobility. 

There is a pressing need to evaluate the impact of these approaches.  It is important to point out that, in the case of contextualised admissions, unless there is an increasing supply of opportunities, this approach at best amounts to  a “zero sum game.” They simply swap people from one socio-economic background for those from another.  We have little evidence to support the wider social or economic benefit of this, nor do we have a clear view about who the “losers” are, or quite what their levels of privilege may be. This is why it is important to understand the link between occupational regulation and social mobility.

As a leader of a further education college, it often strikes me that the most valuable qualifications which we teach are those which have some kind of regulatory requirement attached to them. This is one of the reasons why those in construction, electrical and plumbing, for example, tend to earn more than other trades. And when we design higher education programmes, any requirements in terms of licences to practise appear to add value to the qualification. 

Economists call this occupational regulation. Its purpose is to protect consumers, but as a consequence it also regulates the supply of opportunities in the labour market. It has enormous influence on the value of qualifications and on managing entry to various professional and technical occupations. Yet it hardly ever features in debates about social mobility. How does the system work? How prevalent is it? How does it influence the labour market? Does it create unnecessary obstacles? Is it possible to change it? What might the impact be? 

Of course, in many cases some form of occupational regulation is required to protect the consumer. But such regulation can also act as an artificial barrier to entry, making it harder for people to get into the occupation. Those from lower socio-economic backgrounds may find this particularly hard, as getting regulated or licensed can involve time, money and access to networks which they may not have. Therefore, it’s important to consider when regulation is required and how it can be implemented to keep consumers safe without imposing barriers to entering the profession on those from lower socio-economic backgrounds.

The Social Mobility Commission is very pleased to have commissioned this think piece from Dr Maria Koumenta, an expert in occupational regulation and labour market analysis, to look into this issue. 

The piece is designed as an introduction to the topic, drawing out some of the social mobility implications of current practices and how these might be changed. There are some fascinating insights into how the system works and how it affects progression into some occupations because of familial knowledge (and how the barriers drop for the second generation). 

It also prompts interesting questions such as whether some pieces of regulation can be amended or removed to open up access to the profession without compromising the quality of service and safety of the consumer. These questions might be particularly important for professions which have problems with access to those from lower socio-economic backgrounds or where there is a lot of historical regulation.

We hope the piece provokes a wider debate about the type of labour market regulation which can best balance the need for consumer protection and making professions accessible to those from all socio-economic backgrounds. And we hope it helps to broaden policymakers’ minds, in terms of the range of tools available for ensuring opportunities are available to the widest variety of people in the widest variety of places.