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OPPORTUNITY IN THE WORKPLACE LOW-WAGE EMPLOYMENT IN EUROPE AND THE UNITED STATES Ken Mayhew Caroline Lloyd Susan James.

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Presentation on theme: "OPPORTUNITY IN THE WORKPLACE LOW-WAGE EMPLOYMENT IN EUROPE AND THE UNITED STATES Ken Mayhew Caroline Lloyd Susan James."— Presentation transcript:

1 OPPORTUNITY IN THE WORKPLACE LOW-WAGE EMPLOYMENT IN EUROPE AND THE UNITED STATES Ken Mayhew Caroline Lloyd Susan James

2 BACKGROUND Russell Sage Foundation Projects in the US Russell Sage Foundation Projects in the US LOW WAGE AMERICA, 2004, edited by Eileen Appelbaum, Annette Bernhardt and Richard Murnane LOW WAGE AMERICA, 2004, edited by Eileen Appelbaum, Annette Bernhardt and Richard Murnane RSF commissioned comparable studies in Europe RSF commissioned comparable studies in Europe

3 THE EUROPEAN STUDIES 5 countries: UK, France, Germany, Netherlands, Denmark 5 countries: UK, France, Germany, Netherlands, Denmark Common occupations in 5 sectors: Hotels, Hospitals, Food Processing, Retail and Call Centres Common occupations in 5 sectors: Hotels, Hospitals, Food Processing, Retail and Call Centres UK team: SKOPE, National Institute for Economic and Social Research, and Strathclyde UK team: SKOPE, National Institute for Economic and Social Research, and Strathclyde STAGE 1 STAGE 1 STAGE 2 STAGE 2

4 Proportion of employees below LPT across the 5 countries FRGERNLDKUK Year % employees below LPT 12.2 * % male employees below LPT 8.0 * (approx) 13.2 % female employees below LPT 17.0 * (approx) 31.3 * refers to

5 Proportion of UK workforce falling below LPT,

6 THE GROWTH OF LOW PAID WORK The rise in earnings inequality generally The rise in earnings inequality generally The decline of trade unions The decline of trade unions The removal of legislation and institutions which had provided some protection for the low paid The removal of legislation and institutions which had provided some protection for the low paid

7 Distribution of low-paid employment in the UK economy, analysed by sector SIC codeSector % of total low- paid employees in UK economy % of employees in sector earning below LPT 52Retail Health services Hotels Manufacturing913 80Education Social and community services Cleaning, security and miscellaneous business services Transport and communications Wholesale522 45Construction Other private services38 75Public administration ; Other industries115 TOTAL100 Source: Labour Force Survey

8 Proportion of employees earning less than 2/3 of median hourly wages, Percentage of group who are low paid Full-timePart-time MaleFemalePTFTTotal MaleFemaleMaleFemale

9 Proportion of employees earning less than 2/3 of median hourly wages, , analysed by age group Percentage of age group who are low paid plusTotal Source: New Earnings Survey Panel Dataset.

10 Employees earning less than 2/3 of median hourly wages, , analysed by selected occupational group New Earnings Survey (SOC 1990 classification) % of occupation group who are low paid SOC Assistant nurses, nursing auxiliaries Hospital ward assistants Sales assistants66 721Retail cash desk and check-out operators Bakery, confectionery process operatives Other food, drink and tobacco process operatives Cleaners/domestics677376

11 Annual Survey of Hours and Earnings (SOC 2000 classification) % of occupation group who are low paid SOC Nursing auxiliaries and assistants Sales and retail assistants Retail cashiers and check-out operators Call centre agents/operators Food, drink and tobacco process operatives Cleaners, domestics76

12 Earnings experience of workers in lower quartile (Q1) of earnings distribution in 1977, 1984 and Total% in Q1 in Year 1 who were still employed and still in Q1 in Year Total% in Q1 in Year 1 who were still employed and still in either Q1 or Q2 in Year Males% in Q1 in Year 1 who were still employed and still in Q1 in Year Males% in Q1 in Year 1 who were still employed and still in either Q1 or Q2 in Year Females% in Q1 in Year 1 who were still employed and still in Q1 in Year Females% in Q1 in Year 1 who were still employed and still in either Q1 or Q2 in Year Source: McKnight, 2000, Tables

13 Methodology Call CentresFood Pro-cessingHotelsHospitalsRetail Segments 4 finance 4 utilities 3 meat processing 3 confectionery 3 4* chain 1 5* chain 2 Budget chain 2 2-3* independent 7 NHS hospitals 4 food retailers 4 electrical retailers Focus in-house v outsourcing union v non- union Meat – initially pork; predominantly chicken Chocolate and sugar confectionery More than 100 employees Mass v batch production Independent v chain labour market location 4-5* v 2-3* geographical areas in-house v. out- sourced High quality v low-priced products No. 129 interviews 70 interviews 68 interviews 54 interviews 58 interviews Interviews Managers HR Managers Team Leaders customer service agents Union reps Managers of temp work agencies Managers Team Leaders supervisors Operatives Union/Employee Reps GM Op Manager HR Manager Housekeeping Manager Housekeeping Supervisor Room Attendants Finance Managers HR Managers Nursing managers domestic services managers Temp work bank managers Assistant nurses Cleaners Managers in HQ Store managers Jr store managers Supervisors Sales assistants & check-out operators

14 Food processing Turnover of £58 billion in ,000 companies employing 385,000 workers Exports accounted for only 15% of sales in 2004 The Big Four account for 70% of all food sales

15 Food processing work Varies from continuous production with high levels of automation to hand-made, individual or small batch products Skills requirements generally fairly basic Manual dexterity Ability to undertake routine and repetitive tasks Jobs learnt in a short space of time

16 Issues of pay ChocsNoveltyMintyClucks Ltd Poultry Co Baconco Median Pay * *6.71*7.61 (mean) % Workers below LPT 83%41%0%63%29%Below 10% Agency Pay Agency below LPT 100% Team Leader Pay (highest) *12+*7.38*8.27*na * Alternating 2 shifts LPT = £6.37 na = data not available

17 Issues of pay You would struggle…especially if you are the main earner...I mean it doesnt go that far. (Op, Mintys). For other workers, the only way to live on the pay is to share accommodation costs, be part of a dual income family or undertake substantial levels of overtime. Undertaking an additional 20 hours per week all year could raise annual income from around £12,500 to £20,000. (Shop Steward, Baconco) I have to do overtime… my husband hes disabled so he cant work… so I do the overtime so that I can pay the mortgage. (Op, Clucks Ltd) Most people are forced without a shadow of doubt are forced to work more than 48 hours to bring home a living wage. Its as simple and straightforward as that. Its not a case of want, its a case of need (Shop Steward, Baconco)

18 Qualifications No qualifications required for entry level operative jobs Over 1/3 of all employees in the sector do not have basic school leaving age qualifications Less than 1/3 have intermediate qualification or above

19 What are the jobs like? Pay depressed Working harder Benefits cut Heavy reliance on foreign workers

20 Hotel Industry Remains a low skill, labour intensive service industry with low wages Suggested total turnover of £27 billion Employing between an estimated 240,000 to 309,000 Significant revenue fluctuations

21 Hotel Work Characterised by low pay, poor working conditions and patterns, and high labour turnover I liken my staff to the elves in Harry Potter – beds are made, work is done, but no one sees anyone, the majority of work is done behind the scenes and staff are more or less invisible Executive Housekeeper, cited in Hunter-Powell

22 Issues of pay H1H2H3H4H5H6H7 Star rating* 4 star deluxe 5 star2/3 star4 star deluxe 2/3 star 2/3 star budget Pay£5.05 per hour Salaried = £6.16 per hour £1.72 per room (approx. £6.88 p/h) £5.05 per hour £2.47 per room (approx £5.61 p/h) Rooms in hotel No. of rooms to clean 14 per 8 hrs 11 per 8 hours 16 per 4 hours 14 per 8 hours 9 per 4.5 hours per 5 hours approx per 5-6 hours approx. No. of RAs 14 f/t30 = 25 f/t, 5 p/t 31 = 23 contract cleaning employees, 8 TWA 14 f/t5 f/t4 f/t

23 Issues of pay for the work you do the rate of pay is unbelievable RA, H1 (4* hotel) The pay is crap RA, H4 (4* hotel) I think it is difficult to get the right people now…people dont want to come into the hotel industry…I think it is all down to pay…if you can sit in Tescos for £4.85 on your bum putting food through a scan then people are going to do that rather than physically bending down and moving beds and washing floors and stuff like that Head Housekeeper, H1 (4* hotel)

24 Recruitment No qualifications required Heavy use of agencies in London Local women in Scotland The Polish factor is a big factor in London right now. Britain has opened the door completely to Polish labour which was strangely supported by the government largely because the business community very much supported it because its fantastic for business. It is great for the hotel industry to have the labour market flooded with desperate, exploitable Polish women. The people that are doing outsourced chambermaid jobs are Lithuanian, Polish, Russian, Latin American (Living Wage Campaign Officer)

25 Training Training was on-the-job and shadow existing workers Work alone with some supervision and fewer rooms Deemed competent around 12 weeks Statutory occupational health and safety training Upper market hotels committed to more formal training and regular on-going training thereafter Middle market hotels had limited training beyond statutory

26 Career Progression Opportunities for progression were limited due to flat structure and smaller sized departments Room attendants, supervisors and department managers were the main jobs Could become a self-checker Some of the hotels provided the opportunity to work in other departments and in some cases other hotels within the group We are a bit scared, as soon as you say the hotels university courses. I mean I did too, I really freaked out when I was told you had to do this but I think they are great now and I have been trying to encourage the girls, Head housekeeper, H4

27 Call centres Call centre agents Call centre agents 10% paid close to NMW 10% paid close to NMW 30% paid below LPT (40% part-timers) 30% paid below LPT (40% part-timers) 8 Cases Financial services & utilities (2 outsourcers) Financial services & utilities (2 outsourcers) In-bound, mass market In-bound, mass market

28 Call centre jobs call length: minutes call length: minutes number of calls: per day number of calls: per day tightly monitored & controlled tightly monitored & controlled 1-6 weeks initial training 1-6 weeks initial training so tedious, it was like watching paint dry (Agent F4) I think its just the nature of the job at the end of the day… the fact that youre in a call centre and youre taking non-stop calls… Its just some people can do that for a long period of time and others cant (Agent F3)

29 Improving job quality? 6 companies: quality issues & labour turnover 6 companies: quality issues & labour turnover Response: Response: –Less agency workers –Pay increases –Improve working time –Other activities, eg. employee involvement, social events, training No changes to job design No changes to job design Revolving door mentality Revolving door mentality

30 Retail sector 26% of all low paid workers are in retail 26% of all low paid workers are in retail 70% check out operators & sales assistants below LPT 70% check out operators & sales assistants below LPT Intense competition but increasing concentration & largely profitable Intense competition but increasing concentration & largely profitableCases Food retailers & electrical/ electronic goods Food retailers & electrical/ electronic goods High quality v low price High quality v low price

31 General trends Food No qualifications No qualifications Customer service skills Customer service skills 2-5 days training 2-5 days training Part-time women on shifts + students etc. Part-time women on shifts + students etc. Lack of opportunities for part-timers Lack of opportunities for part-timersElectronics No qualifications No qualifications Product knowledge Product knowledge 2-5 days training 2-5 days training Full-time men on shifts + overtime Full-time men on shifts + overtime Some opportunities, eg. management development Some opportunities, eg. management development

32 Hospitals 17% nursing assistants & 56% cleaners < LPT Cases NHS NHS In-house & outsourced In-house & outsourced Key Developments Major increase in spending followed by budget constraints Major increase in spending followed by budget constraints Agenda for Change – national pay scales, job ladders, end of two tier system Agenda for Change – national pay scales, job ladders, end of two tier system Improved pay Improved pay Other benefits, eg. sick pay, pensions, holidays, unsocial hours payments Other benefits, eg. sick pay, pensions, holidays, unsocial hours payments

33 Nursing Assistants No qualifications but GCSEs Maths & English preferred No qualifications but GCSEs Maths & English preferred Downward mobility Downward mobility Job ladders improved Job ladders improved NVQ2 & 3 NVQ2 & 3 Pay differentials narrowed with cleaners Pay differentials narrowed with cleaners Lack of posts Lack of postsCleaners No qualifications No qualifications reasonable standard of literacy & numeracy reasonable standard of literacy & numeracy Downward mobility Downward mobility No incentives to train No incentives to train Outsourcing barrier to progression Outsourcing barrier to progression

34 Lessons for skills policy Four popular assertions follow, all of which are strong elements in current English/UK skills policy, yet all of which are contradicted by our findings on low paid work.

35 1. Employers are being held back by lack of skills The skills of the workforce are a key driver of the productivity of an economy. Improving the skills of individuals enables firms to improve products and processes, to adapt more quickly to changing competitive environments and to increase opportunities for investment. (HM Treasury, Pre-budget Report 2007:51)

36 2. Level 2 = minimum platform for employability Market Failure We cannot rely on employers to invest in the skills of the lowest skilled without some form of government intervention as there is a market failure, most likely because employers cannot be sure the individual has the ability or motivation to benefit from training ( DfES/DWP (2006: 29) Evidence to Leitch) ( DfES/DWP (2006: 29) Evidence to Leitch)

37 3. Qualifications = progression Bill Rammell, the further and higher education minister defending the focus on boosting skills in colleges: vocational training would save thousands of teenagers from a future in low-paid jobs vocational training would save thousands of teenagers from a future in low-paid jobs (Report in TES 23 June 2006 p1) (Report in TES 23 June 2006 p1)

38 4. Skills = new protection in the labour market We conclude that whatever market segmentation does exist is explained primarily by social disadvantage, caused by lack of basic skills and qualifications, rather than by barriers created by labour law. In the UK context, therefore, we recommend that measures to improve employability, rather than modernisation of labour law, should be the main priority of government policy toward the labour market. (Select Committee on European Union, 22 nd Report, 2007)

39 Recruitment criteria Call centre agent Call centre agent Qualifications - NONE Other – Attitude, personality, staying power Food processing operative Food processing operative Qualifications – NONE Other - Basic English, dexterity

40 Recruitment criteria Hotel room attendant Hotel room attendant Qualifications – NONE Other – NONE Nursing assistant Nursing assistant Qualifications – GCSE Maths/English preferred Other – Experience in caring

41 Recruitment criteria Sales assistants Sales assistants Qualifications – NONE Other – attitude, friendliness, communications skills, basic literacy and numeracy.

42 Example 1 So I suppose you dont need to be perfect for English, well, not English but maths and everything but as long as you can sort of read Danger and dont walk in front of the [machine] that sort of thing. (Line operative, female, poultry processing factory, previously worked as a nanny (trained) & chip fryer)

43 Example 2 We are not so much interested in product knowledge, because you can train that. For me its about flexibility… because we do operate eight to eight, Monday to Saturday. … Its about attitude. Its about telephone manner. But again, you can train that. Its the way that they speak on the phone. … Keyboard skills to a large extent. Knowledge of systems, not necessarily ours but just your way around a computer. You know. So those are the sort of things that we tend to look for. But it is more about flexibility and attitude. (Operations manager, financial call centre)

44 Qualification levels Majority of workers had few/ no qualifications – process operative, hotel and hospital cleaners, retail Majority of workers had few/ no qualifications – process operative, hotel and hospital cleaners, retail Significantly levels of over-qualification – call centres, hospitals, migrant workers Significantly levels of over-qualification – call centres, hospitals, migrant workers –Call centres: graduates/ A levels etc. (transitory job) –Hospitals: women returners Downward occupational mobility Downward occupational mobility

45 Examples of previous jobs Assistant nurses Assistant nurses –Dairy farm manager (own business) –Shop manager, Cable TV sales –Aerobics teacher –Owner of hair salon –Accounts clerk Cleaners Cleaners –Accounts/bookkeeping –Retail supervisor/ Tailor –Qualified (level 3) nursery nurse

46 Hotel room attendants RAs interviewed in a five star hotel outer London RA1 Polish - studied economics at university & worked in a bank RA1 Polish - studied economics at university & worked in a bank RA2 Polish – retail supervisor RA2 Polish – retail supervisor RA3 Vietnamese – no formal qualifications RA3 Vietnamese – no formal qualifications RA4 Slovakian – degree in accounting RA4 Slovakian – degree in accounting RA5 British – studied childcare at college – dropped out RA5 British – studied childcare at college – dropped out

47 Progression opportunities for low paid workers Very limited 1:15 – 1:30? Very limited 1:15 – 1:30? Flat organisational structures Flat organisational structures Supervisory/team leaders but little extra pay Supervisory/team leaders but little extra pay Rare opportunities for part-timers Rare opportunities for part-timers Managers – graduates cascading down through labour market into 1 st line manager jobs Managers – graduates cascading down through labour market into 1 st line manager jobs

48 Qualification = protection in labour market Requires labour market shortage e.g. some call centres (due to turnover) Improved pay and benefits Less agency workers Improved shift system Increased employee engagement No change to work organisation OR skill.

49 Migrants are the new reserve army of labour…. Migrant workers –Out-compete locals attitude and work ethic –Willingness to work for very low pay Our pay scales are lower [than other local companies] … We tried local, you just cant get the people. Even if you get the numbers, you cant get the quality. They will turn up for a couple of days and then wont bother getting out of bed again so the only way to get reliable agency staff is from abroad. (HR manager, food processing, agency pay= NMW)

50 Qualifications, training and progression No qualification requirements No qualification requirements Many over-qualified workers Many over-qualified workers Lack of trust in qualifications? Lack of trust in qualifications? Lack of positions not unwillingness to train Lack of positions not unwillingness to train

51 Conclusion Jobs very simple, easy to learn, Taylorist Jobs very simple, easy to learn, Taylorist Jobs require little training Jobs require little training Most employers will train at lower levels if its needed Most employers will train at lower levels if its needed Abundant labour supply removes constraints Abundant labour supply removes constraints Regulatory constraints minimal Regulatory constraints minimal What about displaced locals? What about displaced locals?

52 Better Worse Call centres FoodHospitalsHotelsRetail Are jobs getting better or worse?


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