Being a woman, being older and working part-time all increase your chances of becoming ‘stuck’ in low pay

 

Women in low-paid employment are on average 47 percentage points more likely than similar men to be still in low pay after ten years, according to new research published today by the CIPD, the professional body for HR and people development, in association with John Lewis Partnership. The Pay progression: understanding the barriers for the lowest paid report, written by Tooley Street Research, outlines the key contributing factors associated with an individual becoming ‘stuck’ in low pay.

The report, which categorises low pay as those paid below 20% above the minimum wage, shows evidence of a huge increase in the number of people on low pay between the 1990s and 2010s. In 2011, just under a quarter (24%) of all UK employees were in low pay, equating to around 7 million people, compared to around 15% of employees (4 million) in the 1990s. Over this period, on average, 19% of people in low pay remained ‘stuck’, 37% were able to escape low pay and the remainder, around 40%, have cycled in and out of low paid work.

In depth analysis of those ‘stuck’ in low pay revealed that:

• The majority of those in low pay are women (64%), and although this has improved since the 1990s (when women represented over 70% of the low paid workforce), the data highlights that women are much less likely to escape low pay than men.
• There is a strong correlation between age and the chances of being stuck in low pay, with the likelihood of escaping low pay becoming less likely the older you become. A typical person aged 35 is 24 percentage points more likely to escape low pay than a similar person who is 45.
• Working part-time for more than a year within a ten year period is also strongly associated with a higher chance of being stuck in low pay. Someone that works part- time for at least two out of ten years is 16 percentage points more likely to be stuck in low pay than someone who worked full-time. Qualitative analysis also reveals that people who want to work part-time fear that they cannot signal dissatisfaction with pay levels, or their desire to progress, in case it jeopardises their ability to work reduced hours.
• There is a clear relationship between pay and academic qualifications: the higher a person’s academic qualifications, the less likely they are to be stuck. GCSE level qualifications increase the chance of escaping low pay by 40 percentage points, A-levels increase this by 59 points and a degree increases this by 71 points.
• Working in the public sector is strongly associated with a higher chance of being an ‘escaper’ and a lower chance of being stuck in low pay. Furthermore, each year working in the public sector increases the probability of escaping low pay by 7 percentage points.

Commenting on the findings, Peter Cheese, Chief Executive of the CIPD says: “Over most of the last six years we have seen a significant fall in real wages, with evidence showing that the UK has a high proportion of workers employed in low wage roles compared with our international competitors. However to date there has been little evidence on which factors mean that some people become stuck in low paid jobs for most or all of their working lives, whereas others escape it or cycle in and out of low pay. This research shines a light on these issues and has important implications for policy makers and employers.

“For policy makers, the key focus needs to be on how the supply of higher skilled jobs can be increased across the UK economy. This means a focus on boosting demand for investment in skills amongst employers and improving how skills are developed and utilised in the workplace. At the same time we need much better careers advice and guidance to help young people make the right choices about qualifications and career pathways which lead to higher paying jobs, and to support older workers who want to re-train and increase their earnings potential.

“For employers, there needs to be a focus on considering the untapped potential of part-time workers. Some part-time employees may be keen to take on more responsibility and progress, but are frightened to voice these wishes for fear that it will impact on their ability to work reduced hours. By offering job-sharing opportunities or explicit progression paths for part-time workers, employers may find untapped reservoirs of talent and experience from within their existing teams. Employers should also think about designing jobs which enable employees to build their skills and use them to add value for the employer as alternatives to the management track, for example, in enhanced customer service roles.”

Sir Charlie Mayfield, Chairman of John Lewis Partnership, says: “John Lewis Partnership has sponsored this research to help us better understand the labour market trends that are creating barriers – both to earnings for individuals and to overall productivity. Our aspiration is to provide useful new insights for ourselves, for other employers, and policy makers too.”

Full press release on www.cipd.co.uk

 
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