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U NIVERSITY OF A MSTERDAM Low-wage Labour, A European Perspective Wiemer Salverda AIAS LoWER Amsterdam Institute for Advanced Labour Studies European Low-wage.

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Presentation on theme: "U NIVERSITY OF A MSTERDAM Low-wage Labour, A European Perspective Wiemer Salverda AIAS LoWER Amsterdam Institute for Advanced Labour Studies European Low-wage."— Presentation transcript:

1 U NIVERSITY OF A MSTERDAM Low-wage Labour, A European Perspective Wiemer Salverda AIAS LoWER Amsterdam Institute for Advanced Labour Studies European Low-wage Employment Research network Working out of Poverty: A progressive labour market Workshop 8 May 2008 London

2 U NIVERSITY OF A MSTERDAM AIAS A four-year five-country project - some aggregate analysis case studies: low-wage jobs in low- paying industries (Ho, Re, CC, Hp, Fo) Initiated by Russell Sage Foundation, New York, with strong stimulus from Robert Solow (Nobel Laureate Economics 1987) Five books just published & presented to John Martin (director OECD) (comparative volume including US in preparation) New Research Results

3 U NIVERSITY OF A MSTERDAM AIAS Main Differences Within EU Incidence of low pay among employees and all, %, 2005 (national data) Level of low-paid employment in 2005 Germany now at par with US DK and FR far lower

4 U NIVERSITY OF A MSTERDAM AIAS Level & evolution of low-paid employment The Familiar Picture: high UK, US Incidence & evolution of low pay among employees, %, (national data) US around 25% UK up from 12 to 22%, steady since 1997

5 U NIVERSITY OF A MSTERDAM AIAS Level & evolution of low-paid employment Steadily Low Levels: DK, FR Incidence & evolution of low pay among employees, %, (national data) DK always around 9% FR slowly down to 11%

6 U NIVERSITY OF A MSTERDAM AIAS Moving up to High Levels: DE, NL Incidence & evolution of low pay among employees, %, (national data) Level & evolution of low-paid employment DE up since mid-1990s (full-time!) NL sharply up from 9 to 17% in mid-1990s

7 U NIVERSITY OF A MSTERDAM AIAS Low Pay and Employment Diverge Incidence of low pay and employee employment rate, %, 2005 (national data) Low pay and employment rate in 2005 DK highest E-rate and lowest LWI Only FR trade-off, perhaps...

8 U NIVERSITY OF A MSTERDAM AIAS Contradictory Movements Pay and Jobs Employees to population (15-64) ratio, %, (OECD economic outlook) Evolution employee employment rate DK high US up & down UK down on balance DE, FR up NL down & up (head count!)

9 U NIVERSITY OF A MSTERDAM AIAS Transitions out of and into Low Pay % of employees remaining/transiting in a year, pooled over (ECHP) Earnings mobility DK, FR more mobile upward DK often via no job? UK lower no- jobs stays NL frequent low-pay access DKFRDENLUK Remain low paid High to low pay Low to high pay Into low-pay job Into high-pay job Remain out of job Low pay to out High pay to out

10 U NIVERSITY OF A MSTERDAM AIAS 1. Main differences are now within EU, more than between US and EU 2. Surprisingly stable levels of incidence, low as well as high (throws up very interesting questions) 3. No prima facie relation of low pay incidence to employment success 4. More mobility in the two countries with a lower incidence Summary 1 Overall

11 U NIVERSITY OF A MSTERDAM AIAS Demographics Women Employees-to-population ratios by age, %, 2001 (ECHP, Eurostat and CPS) Characteristics of low pay Youth makes most of the difference; prime age only DK exceptional UK older women (head count!)

12 U NIVERSITY OF A MSTERDAM AIAS Demographics Men Employees-to-population ratios by age, %, 2001 (ECHP, Eurostat and CPS) Characteristics of low pay Youth most of the difference again; prime age DK less exceptional FR older men lower, but not because of low pay

13 U NIVERSITY OF A MSTERDAM AIAS Usual Suspects and... Importance part-time (<35 hrs) jobs for low- wage employment, Netherlands, Characteristics of low pay Youth: educational system incl. grants Female 2 nd earners combine with household All seek part- time jobs Part-time shares in low-wage employment, 2001 DKFRDENLUKUS 38%21%35%64%49%39%

14 U NIVERSITY OF A MSTERDAM AIAS Industries and Low Pay Determinants (selected) of probability, pooled (ECHP, bold significant) Characteristics of low pay DK low risk for women, steep for age NL steep for education UK, NL part- time effects and risk of continuation DKFRDENLUK Female >=30 & <45 years >=45 & <65 years Secondary education Tertiary education Part-time Temporary contract >= 5 years Sales occupations Craft Operators Elementary Trade, hotels, restaurants Low pay at previous year

15 U NIVERSITY OF A MSTERDAM AIAS Shift-share Comparison of Low Pay Differences in low-wage incidence compared to US structure and incidence, 2001 (ECHP) Characteristics of low pay Total difference due to different incidence due to other sectoral structure interaction DK FR DE NL UK Sectoral effects are small & comparable DE, NL face higher risk with US structure

16 U NIVERSITY OF A MSTERDAM AIAS Fall of Middle Hinders Pay Careers Percent of employees paid between 2/3 and 1.5 median hourly wages, (various data) Evolution middle of earnings distribution DE, NL strong fall, towards low pay US, UK low, declining FR may be stable (DK no data)

17 U NIVERSITY OF A MSTERDAM AIAS 1. Usual suspects suffer more from low pay everywhere: youth, women, low skilled, immigrants etc. 2. Growing part-timisation of low-wage jobs poses career problems for low- skilled school-leavers & unemployed, also for improving female hours worked (also necessitates FTE analysis) 3. Low-wage sectors are universal and main users of part-time jobs, but comparative sectoral structure has only a small effect 4. Declining middle affects career prospects after a low-paid start Summary 2 Composition

18 U NIVERSITY OF A MSTERDAM AIAS Working-age Poverty and Work Low-pay threshold and poverty wages, 2005 (Eurostat) Poverty and pay Difference of principle: labour- market pay versus workers household situation

19 U NIVERSITY OF A MSTERDAM AIAS Working-age Poverty and Work Population and employed at risk of poverty (%), importance of employed, 2005 (Eurostat) Poverty and pay Modest aggregate differences Larger role of employed in UK, NL

20 U NIVERSITY OF A MSTERDAM AIAS Households In-work Poverty Proportion of the population in poor* households, 1984–2001 (OECD) Poverty and pay Larger differences, and US much higher With at least one workerAll households DK FR DE NL UK US

21 U NIVERSITY OF A MSTERDAM AIAS Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, US Affecting the tail of low pay No effect on LWI Equal fall of MW & MW- employment

22 U NIVERSITY OF A MSTERDAM AIAS Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, NL Affecting the tail of low pay Strong fall of MW, less of MW jobs and (later) growth of LWI

23 U NIVERSITY OF A MSTERDAM AIAS Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, UK Affecting the tail of low pay Increasing MW, stable MW jobs and LWI

24 U NIVERSITY OF A MSTERDAM AIAS Distribution of Low Pay and MWs Very different tails and impact of minimum wage Affecting the tail of low pay Very long tails for DE without MW, NL with youth MWs

25 U NIVERSITY OF A MSTERDAM AIAS 1. Poverty and low pay are not identical though related; more research along IPPR lines is needed 2. Minimum wage does not necessarily affect LWI 3. Tail of low wages very different with diverging effects of MW LOW PAY MAY BE A COUNTRYS CHOICE BUT IT IS NOT A SINGULAR CHOICE; DIMINISHING IT MAY BE DESIRABLE FOR SEVERAL REASONS (POVERTY, PRODUCTIVITY); ITS PART-TIME-ISATION DEMANDS COMPENSATING MEASURES Summary 3 Policies Overall Conclusion


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