LLAKES International conference 5-6 July 2010 Exploring Inequality and its Consequences: Education,

Labour Markets, and Communities

Skill: the solution to low Skill: the solution to low wage work?wage work?

Caroline Lloyd and Ken Caroline Lloyd and Ken MayhewMayhew

ESRC centre on Skills, Knowledge and ESRC centre on Skills, Knowledge and Organisational Performance (SKOPE)Organisational Performance (SKOPE)

Cardiff University and University of OxfordCardiff University and University of Oxford

OutlineOutline

Problem of low payProblem of low pay

Labour government’s assumptions about skills Labour government’s assumptions about skills and low payand low pay

Questioning the assumptions: evidence from Questioning the assumptions: evidence from Russell Sage Foundation project on low wage workRussell Sage Foundation project on low wage work

– Skill shortages holding firms backSkill shortages holding firms back– Minimum platform of employabilityMinimum platform of employability– Progressing out of low wage jobsProgressing out of low wage jobs– Qualifications a protection in the labour marketQualifications a protection in the labour market

ConclusionsConclusions

Proportion of UK workforce falling below 2/3 median hourly wage, 1975-2006

0

5

10

15

20

25

30

35

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

% e

mp

loye

es b

elo

w lo

w p

ay t

hre

sho

ld

Men Women Total Men Women Total

Source: Mason et al 2008

INCIDENCE OF LOW PAY, % OF EMPLOYEES, 1973-2005

6

16

26

1973 1977 1981 1985 1989 1993 1997 2001 2005

US

UK

DE

NL

FR

FRoecd

DK

Source: Mason & Salverda 2008

(below 2/3 median hourly wage)

The AssumptionsThe Assumptions

1.1. Employers are being held back by lack Employers are being held back by lack of skillsof skills

2.2. Level two = ‘minimum platform for Level two = ‘minimum platform for employability’employability’

3.3. Qualifications = progressionQualifications = progression

4.4. Qualification = protection in the labour Qualification = protection in the labour marketmarket

Skills are the answer…Skills are the answer…

The skills of the workforce are a key driver of the The skills of the workforce are a key driver of the productivity of an economy. Improving the skills of productivity of an economy. Improving the skills of individuals enables firms to improve products and individuals enables firms to improve products and processes, to adapt more quickly to changing processes, to adapt more quickly to changing competitive environments and to increase competitive environments and to increase opportunities for innovation. (HM Treasury opportunities for innovation. (HM Treasury Per-Per-Budget Report, Budget Report, 2007:51)2007:51)

‘‘By helping people improve their grasp of the By helping people improve their grasp of the basics, we help them develop the platform of skills basics, we help them develop the platform of skills they need to find, stay and progress in work. We they need to find, stay and progress in work. We help them to improve their earnings.’ (DIUS help them to improve their earnings.’ (DIUS Skills Skills for Life: Changing Livesfor Life: Changing Lives 2009:4) 2009:4)

JobEstimated

jobs% female % part-

time% earning below 2/3 median pay

(£6.59)

Call centre agent 742 000 71 24 31

Food, drink, tobacco processing operative

173 000 29 13 31

Hotel cleaner 25 900 (2007/8)

85 56 89

Hospital cleaner 55 000 (2003/4)

90 66 56

Nursing auxiliary 227 000 86 44 17

Retail sales assistant

1 179 000 71 65 72

Check-out operative 147 000 75 75 69

UK 46 25 22

Source: Annual Survey of Hours and Earnings 2006, Lloyd et al 2008, People 1 st 2009, UNISON 2009.

Job characteristics, 2006

Recruitment criteria

Qualifications Other

Call centre agent GCSEs A-CMaths/English

preferred

‘Attitude’ ‘personality’ ‘staying power’

Food processing operative

None Basic English (some), dexterity tests (some)

Hotel room attendant None None

Hospital cleaner None ‘Reasonable standard of literacy & numeracy’

Health care assistant GCSEs Maths/English

preferred

Experience in caring

Sales assistants, check-out operative

None ‘Attitude’, ‘friendliness’, communication skills, basic numeracy and literacy. Electronic product knowledge

Numeracy and literacy Numeracy and literacy demandsdemands

I suppose you don’t need to be perfect for English, well, not I suppose you don’t need to be perfect for English, well, not English but maths and everything but as long as you can English but maths and everything but as long as you can sort of read ‘Danger’ and don’t walk in front of the sort of read ‘Danger’ and don’t walk in front of the [machine] that sort of thing. (Line operative, food [machine] that sort of thing. (Line operative, food processing factory)processing factory)

I mean we have had work experience kids in who have I mean we have had work experience kids in who have been, I wouldn’t say illiterate but not very literate and been, I wouldn’t say illiterate but not very literate and they’ve managed … to a certain extent yes they do have to they’ve managed … to a certain extent yes they do have to be literate, they just need to be able to read the room be literate, they just need to be able to read the room numbers to be honest. (Hotel cleaning supervisor)numbers to be honest. (Hotel cleaning supervisor)

Under or over-qualified?Under or over-qualified?

Majority of workers had few/ no qualifications: Majority of workers had few/ no qualifications: process operative, hotel and hospital cleanersprocess operative, hotel and hospital cleaners

Significantly levels of over-qualification: call Significantly levels of over-qualification: call centres, hospitals, retail, migrant workerscentres, hospitals, retail, migrant workers– Call centres: graduates/ A levels etc. (transitory job)Call centres: graduates/ A levels etc. (transitory job)– Hospitals, retail: women returners/ studentsHospitals, retail: women returners/ students

Downward occupational mobilityDownward occupational mobility

Progression opportunitiesProgression opportunities

Improvements in the NHS: Agenda for Change/ Skills Improvements in the NHS: Agenda for Change/ Skills EscalatorEscalator

– Increased uptake of NVQ2 and NVQ3Increased uptake of NVQ2 and NVQ3

– Link to new intermediate posts, e.g. assistant practitionerLink to new intermediate posts, e.g. assistant practitioner

– Nurse training secondmentNurse training secondment

– But lack of posts, over demand for nurse training, budget cutsBut lack of posts, over demand for nurse training, budget cuts

Other jobs: limited opportunity/reduced upward mobility Other jobs: limited opportunity/reduced upward mobility

– Supervisor positions but little additional pay (except call Supervisor positions but little additional pay (except call centres)centres)

– Promotion not linked to qualificationsPromotion not linked to qualifications

– Rare opportunities for part-timersRare opportunities for part-timers

Few opportunitiesFew opportunities

I think you’d need to be here a couple of years, you I think you’d need to be here a couple of years, you would need to know everything and do everything would need to know everything and do everything perfect and all that to get a supervisor’s job… and the perfect and all that to get a supervisor’s job… and the girls have been here for years and they’ve not got it… girls have been here for years and they’ve not got it… (Room attendant, 4* hotel)(Room attendant, 4* hotel)

If I chose to better myself, it would have to be on a If I chose to better myself, it would have to be on a full-time basis because they don’t do that part-time in full-time basis because they don’t do that part-time in which case I couldn’t do it. I mean, I have done. I have which case I couldn’t do it. I mean, I have done. I have been all sorts, I have been a trainer, I have been a been all sorts, I have been a trainer, I have been a knife sharpener… I have even been a front line knife sharpener… I have even been a front line manager. (Female food processing operative aged 43, manager. (Female food processing operative aged 43, lowest grade)lowest grade)

Qualifications: a protection in the Qualifications: a protection in the labour marketlabour market

Lack of labour market powerLack of labour market power

Deterioration in the quality of workDeterioration in the quality of work

Abundant labour supply (part-time and migrant workers)Abundant labour supply (part-time and migrant workers)

Our pay scales [the NMW] are lower [than other local companies] … Our pay scales [the NMW] are lower [than other local companies] … We tried local, you just can’t get the people. Even if you get the We tried local, you just can’t get the people. Even if you get the numbers, you can’t get the quality. They will turn up for a couple of numbers, you can’t get the quality. They will turn up for a couple of days and then won’t bother getting out of bed again so the only way days and then won’t bother getting out of bed again so the only way to get reliable agency staff is from abroad. (HR manager, food to get reliable agency staff is from abroad. (HR manager, food processing company)processing company)

Exceptions:Exceptions:NHS – role of the state/ trade unionsNHS – role of the state/ trade unions

Call centres – retention problems led to improvements in some Call centres – retention problems led to improvements in some aspects of job qualityaspects of job quality

ConclusionConclusion

Jobs very simple, easy to learn, TayloristJobs very simple, easy to learn, Taylorist

Jobs require little trainingJobs require little training

Abundant labour supply + weak labour market Abundant labour supply + weak labour market regulation removes constraints & undermines job regulation removes constraints & undermines job qualityquality

Skills Skills not not going to solve low wage workgoing to solve low wage work

Comparative research (eg. Gautié & Schmitt (eds.) Comparative research (eg. Gautié & Schmitt (eds.) 2010 2010 Low Wage Work in the Wealthy Low Wage Work in the Wealthy World) World) shows importance of wage setting institutions, eg. shows importance of wage setting institutions, eg. collective bargaining coverage, minimum, wagescollective bargaining coverage, minimum, wages