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A mild zombie apocalypse doesn’t sound good. But in its 2026 outlook, the Resolution Foundation think-tank noted “early and encouraging” signs of one. Its vision involved killing old jobs (the living dead) to make room for more productive ones elsewhere (the living). Although the process would be nasty — job losses can be devastating, and their victims deserve help — a bit of gore could be tolerable, if it could deliver what the UK economy so desperately needs: productivity growth.
To see how, note the enormous differences in measured productivity between companies and sectors. Turnover per employee is around 17 times higher in the top decile of construction companies than in the bottom decile, for example. While some productivity growth has historically involved the absorption of new ideas and technologies, an important component has come from zombified companies and jobs shrinking away.
Over the 2000s and 2010s the UK economy, along with many others, seemed to become worse at clearing out its zed heads. (Can you tell I’m running out of zombie synonyms?) The churn of jobs between shrinking and growing companies fell. And whereas over the five years up to 2001 over 11 per cent of jobs had shifted sectors, by 2019 the share was just under 7 per cent.
The apocalypse-cheerers pointed to a couple of signs that these trends might be reversing. First, it looks like jobs are moving between sectors a bit more quickly than they have been in the past, at least on that five-year horizon. And squinting at the data, in 2024 job destruction from closing companies was at its highest rate since 2011. Could higher interest rates, energy prices and minimum wages be clearing out zombified bits of the economy?
The most obvious challenge is that not all churn is the same. One study of Chile between 2005 and 2016 found that only around 51 per cent of job moves were towards higher-productivity employers. This was a majority, and enough to mean that the reallocation was good for productivity, but only just. On average, dying companies do tend to be less productive than survivors. But a massacre could hit some healthy companies too.
There’s also no guarantee that employment shifts across sectors move people towards higher productivity work, and indeed over the 2000s one of the fastest falling areas of employment was manufacturing, a relatively high-productivity sector. Changes in employment patterns could be because of efficiency gains making some jobs redundant, or a response to changing demand.
I tried to work out whether the recent shifts in UK employment were towards particularly productive sectors. But it looks like over the year up to the second quarter of 2025, moves in either direction roughly cancelled each other out. The Resolution Foundation’s Gregory Thwaites did share some analysis with me suggesting that, on average, employment has been shifting towards better paid areas (not quite productivity, but I’ll take it).
If employment hasn’t been shifting towards sectors of the economy with higher measured productivity, it’s not unusual. Historically, it doesn’t look like job reallocation between sectors has contributed very much to overall productivity growth at all. In the US, the EU and the UK, most of the productivity slowdown in the 2010s was because of declining productivity within industries. The pandemic did provide a (temporary) boost to productivity, as lower value-added service sectors shut down. Remind me . . . was that fun?
If the gains from rising reallocation between sectors are hard to find, what about the benefits associated with (hopefully bad) jobs being destroyed? Eyeballing the numbers, I would probably emphasise the “early” part of the Resolution Foundation’s assessment. The rate of jobs destroyed by shrinking businesses — an important component of churn — hasn’t reversed its downward trend. (In the mid-2000s job reallocation from shrinking to growing companies was a more important contributor to UK labour productivity growth than companies going bust.)
And as the Resolution Foundation cautioned, we don’t see signs of flourishing job creation — yet. In the short-term, the think-tank shared that its own internal measures of recent productivity were rising, but largely because fewer people were producing the same amount of stuff. I am a wimp, and last watched a zombie film in 2007. (For the record, the “comedy” Shaun of the Dead is terrifying.) Still, my understanding is that for a truly happy ending, the cleared-out zombies need to be replaced by healthier humans.