Social Mobility Commission: low pay endemic in UK

 

The Social Mobility Commission, an advisory, non-departmental public body, monitors progress towards improving social mobility in the UK and promoting social mobility in England.

This latest report concludes that, for many, low paid roles are not the first rung on the ladder – they are the only rung.

The report also acknowledges that, with Brexit in mind, the next few years will be pivotal for the UK labour market, particularly when it comes to answering longstanding issues for both firms and workers. This is particularly in the face of woeful productivity growth since the financial crisis and a decades’ long overreliance on low-paid jobs.  

The Commission’s research focused on how these two are connected and the fact that a more productive economy is more likely to be built by a more highly skilled, highly paid workforce.

Setting out to answer the question of whether low paid jobs are a step towards better paid, better skilled roles, or as good as many employees can get, the Commission tracked traditionally low paid employees over 10 years.

The Commission were able to divide the sample into 3 groups: ‘Stuck’ employees who remained in low paid work, ‘Escapers’ who earned above the threshold in the last 3 years of the study and ‘Cyclers’ who consistently moved between the previous two groups.

By 2016, just 17% were Escapers, 25% remained Stuck throughout and 48% were Cyclers. The remaining 10% exited the data, meaning they were not an employee after the initial period.

However, while the overall picture is negative, the report shows progress compared to recent decades. For example, the equivalent data for 1981-91 shows 31% as Stuck. The falling share of those previously Stuck is adding to the ranks of those counted as Cyclers.

Other notable progress within groups is that while women are overrepresented among those remaining Stuck, the proportion has fallen from almost half in ’81-’91, to 30% in this most recent report. In contrast, the risk of long-term low pay has increased for men over the same period (from 20% to 25%).

The report also finds that the number of years spent in employment is positively and significantly linked to escaping from low pay: 2016 Escapers had been in employment for an average of 8.3 years compared to 4.5 years for the Stuck. With women more likely to take time out of the labour market after giving birth, the analysis finds that women are significantly less likely to Escape than men

The report concludes that taking progression seriously and building more routes into higher skilled, higher paid positions should be part of the Government’s forthcoming industrial strategy, which should prioritise both high-employment and reducing the prevalence of low pay in sectors in which it is endemic, such as hospitality and retail. By focusing on these parts of the economy, low pay can become a springboard to higher earnings for more people.

Andy Bagnall, director at KPMG UK, says “It’s shocking that whilst unemployment figures are at the lowest since 1975, Britain has one of the highest proportions of low paid work in the developed world. The findings of this report reiterate the importance of paying the real Living Wage, which helps eradicate working poverty and in turn improve social mobility.

“As employers we can take active steps to address this, by paying the real Living Wage.  This also delivers tangible business benefits.  In our own firm it has improved staff morale and driven a rise in service standards, improved the retention of staff and increased our productivity.”


Thursday, 26 October 2017

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Social Mobility Commission: low pay endemic in UK