The UK's Shifting Economic Employment Structure

What does employment structure tell us?

A country's employment structure shows how its workers are distributed between different economic sectors. A farmer obtains raw materials and works in the primary sector. A factory worker making steel or clothing works in the secondary sector. Teachers, nurses, shop assistants and lawyers provide services in the tertiary sector. Scientists developing new technologies work in the knowledge-based quaternary sector.

These categories describe the activity being carried out, rather than simply where someone works. A rural job is not necessarily agricultural, and an urban job is not necessarily manufacturing. Quaternary activities are often treated as a specialised part of the wider service economy, but distinguishing them helps show the growing importance of research and innovation.

From farming and factories to services and knowledge

Before industrialisation, farming was a major source of employment and most people lived in rural areas. During the Industrial Revolution, particularly between 1750 and 1900, manufacturing expanded and workers moved to towns and cities to take factory jobs.

The UK later moved towards a post-industrial economy. Primary and secondary activities became less important as sources of employment, while services and knowledge-based activities grew. This does not mean that farming or manufacturing disappeared: it means that they employ a smaller proportion of the workforce.

The change has several connected causes. Some reduce the demand for workers in traditional industries; others create new jobs in services and research.

Why do primary and secondary activities need fewer workers?

Mechanisation allows machines to do work previously carried out by people. In farming, machinery reduces the labour needed to produce food. In factories, machines can carry out production tasks with fewer workers. Businesses can therefore maintain or increase production while employing fewer people. A decline in employment is not necessarily a decline in output.

Manufacturing has also faced stronger international competition. Cheaper imported goods can make it harder for UK factories to sell their products profitably. Some businesses move production overseas to reduce costs, especially labour costs. When a factory closes or transfers production abroad, its UK manufacturing jobs are lost.

Together, these changes contribute to deindustrialisation. However, the process is uneven: some manufacturing survives by specialising in higher-value products rather than competing mainly on low production costs.

Why have services and research grown?

A growing population needs more services, including schools, healthcare and shops. This creates demand for teachers, medical staff and retail workers. Rising incomes also allow people to spend more on leisure, eating out and tourism, supporting further service employment.

The UK's international role creates another source of demand. London is an important financial and business centre, supporting employment in banking, legal services and other activities serving businesses. These services can have customers beyond the local area, including overseas customers.

Education helps workers enter skilled occupations. More highly qualified workers can take jobs in medicine, law, finance, science and technology. Universities also support quaternary growth by supplying graduates, research facilities and new ideas. Science parks bring research-based businesses together, often close to universities, helping turn scientific knowledge into new products and services.

Cambridge provides a concrete example of research employment: the British Antarctic Survey employs scientific and professional staff there as part of its wider polar research work. Quaternary employment therefore involves producing knowledge, not simply providing routine services.

Why does the change vary between urban regions?

Regions do not all begin with the same industries or attract the same new activities. This means that a national shift towards services can produce very different local outcomes.

In northern cities such as Liverpool and Leeds, the loss of manufacturing employment contributed to unemployment and deprivation in affected inner-city areas. New service jobs do not automatically replace the jobs lost: they may be in a different location or require different qualifications.

London, by contrast, benefits from its concentration of financial and business services. Its international business role helps generate tertiary employment. Comparing London with northern cities shows why the UK's changing employment structure cannot be explained by a single national trend alone.

Service and knowledge-based jobs are not confined to city centres either. Business parks can locate on urban fringes, where land is cheaper and there is more space, while science parks benefit from links to universities.

Cornwall: change in a rural and coastal region

Mechanisation reduces the need for agricultural labour in rural areas, while demand for tourism and other services provides alternatives to primary employment. Cornwall illustrates why a rural economy should not be understood simply as farming and fishing: its employment includes manufacturing, construction, tourism, healthcare and education.

Between 2011 and 2021, Cornwall's manufacturing employment fell by 2,889 jobs, or 15%. Over the same period, employment in health and social work grew by 6,778 jobs, or 20.5%. This is a concrete example of declining secondary employment alongside growing tertiary employment in a rural and coastal region.

Local demand helps explain the importance of services. Cornwall has an older population than the national average, increasing the importance of healthcare and care services. Tourism also supports service jobs in accommodation and food businesses. Its employment pattern therefore differs from London's concentration of financial and business services, even though both have substantial service employment.

Cornwall's economy remains mixed. Construction employment also increased between 2011 and 2021, by 5,298 jobs, or 24.1%. Construction belongs to the secondary sector, so the decline in manufacturing does not mean that every secondary activity declined. Across Cornwall, wholesale, retail and motor trades, health and social work, construction, accommodation and food services, and education together accounted for 60% of employment in 2021.

How can quaternary activities develop in rural Cornwall?

Rural regions can also develop a knowledge-based economy. Cornwall has capabilities in space technology, data and communications, alongside innovation in renewable energy, marine technology and agricultural technology. Researching and developing these technologies is quaternary work; manufacturing equipment or producing food remains secondary or primary work. New knowledge-based activities can therefore develop alongside traditional rural industries rather than simply replace them.

Investment helps explain this development. Cornwall received EU structural funding as a less-developed region and, more recently, investment through the UK Shared Prosperity Fund. This funding has enabled investment in businesses and assets supporting newer activities. Cornwall also has innovation networks and clusters: groups of businesses across different sectors that share expertise and develop ideas. Investment provides resources, while these networks connect knowledge and businesses, supporting technological development and opportunities for skilled work.

This gives Cornwall a different route towards quaternary growth from Cambridge's university-linked research. Its rural and coastal economy provides opportunities for innovation in energy, marine and agricultural technologies, while space technology and communications broaden its economic activities beyond farming and tourism. These developments do not mean that knowledge-based work already dominates Cornwall's employment, but they show why quaternary growth is not confined to large cities.

What does this mean for the economy and its workers?

The shift creates opportunities in services, research and technology, but its benefits are unevenly distributed. Workers losing traditional industrial jobs may need retraining before they can enter growing sectors. Former industrial areas can experience lasting deprivation, even while the national service economy expands.

There can also be environmental benefits: fewer traditional industrial activities can reduce local pollution. The central connection is that changes in technology, international competition, consumer demand, education and investment alter both what the UK produces and where and how people earn their living.

The overall shift

The UK is post-industrial: employment has shifted away from primary and secondary activities towards services and knowledge-based work. Farming and manufacturing have not disappeared.

Main causes

• Mechanisation: fewer workers needed in farming and factories.
• Overseas competition and relocation: cheaper imports and lower overseas production costs reduce UK manufacturing employment.
• Population growth: greater demand for education, healthcare and retail.
• Higher incomes: more spending on leisure and tourism.
• Education, universities and research: support skilled services and quaternary jobs.
• International business links: support finance and business services.
• Investment and innovation networks: support new knowledge-based activities, including in rural regions.

Contrasting places

• London: financial and business services support tertiary employment.
• Liverpool and Leeds: manufacturing job losses contributed to inner-city deprivation.
• Cambridge: university-linked research and scientific employment illustrate quaternary activity.
• Rural Cornwall, 2011–2021: manufacturing employment fell 15%; health and social work employment rose 20.5%. An older population makes care services important; tourism supports accommodation and food-service jobs.
• Cornwall's knowledge economy: investment and innovation networks support development in space technology, data, communications and green technologies. Research and development are quaternary activities.
• Cornwall's construction employment rose 24.1%: not every secondary activity declined.
• Urban fringes and university-linked sites: business and science parks accommodate newer activities.

Employment shares can change without equivalent changes in output. New jobs may require different skills from those lost.