Starting out or getting stuck? Alex Hurrell

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Both low pay and social mobility are recognised as serious concerns in Britain but much less attention has been given to how easy or hard it is for someone to work their way up the earnings scale. Who gets stuck on low pay and who gets on? This is the presentation by Alex Hurrell from the Resolution Foundation event on pay progression on 27th Nov 2013. With speakers : Frances O’Grady – General Secretary, TUC Sir Charlie Mayfield – Chairman, John Lewis Partnership Vidhya Alakeson – Deputy Chief Executive, Resolution Foundation Matthew Taylor – Chief Executive, RSA
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  • 1. …………………………………………………………………………………………………….. Starting out or getting stuck? An analysis of who gets trapped in low paid work—and who escapes Alex Hurrell 27 November 2013 #movingup
  • 2. Low pay in the UK …………………………………………………………………………………………………….. • UK has a big low pay problem • Possibly less worrying if low pay is only acting as a first rung? • Under-developed aspect of the social mobility debate 2
  • 3. Key research questions …………………………………………………………………………………………………….. • How many employees remain trapped on low pay for 10 years or more? • How many employees manage to progress? • Are there systematic differences between lowpaid who progress and those who don’t? 3
  • 4. Research approach …………………………………………………………………………………………………….. • New Earnings Survey Panel Dataset (NESPD) – Very large sample – Longitudinal data: tracks same workers over time – Long time span: 1975-2012 (annual snapshots) • So we can identify the workers who remain trapped on low pay over time – Key measure: hourly wage excluding overtime • Data limitations: some implications for analysis – Set out in full in the report 4
  • 5. Identifying those stuck on low pay …………………………………………………………………………………………………….. • Defining those trapped on low pay: – – – • Includes those cycling between low-paid employment and being out of work – • Low paid in 2012 Only held low-paid jobs in previous decade (2002-2011) Aged over 25 “Low-pay-no-pay cycle” Includes those switching in and out of selfemployment (data limitation) 5
  • 6. How many employees are trapped on low pay in 2012? …………………………………………………………………………………………………….. Source: Resolution Foundation analysis of NESPD 1975-2012. 6
  • 7. How many low-paid employees manage to progress? …………………………………………………………………………………………………….. • Look at the period 2002-2012: – – • Identify employees who were low-paid in 2002 Track cohort over subsequent decade (2003-2012) Split the low paid 2002 cohort into three groups: – – – Escapers: earning above low pay threshold in 2010, 2011 & 2012 The stuck: have only ever held low pay jobs between 2002-2012 (when employed) Cyclers: not stuck but do not fully escape 7
  • 8. How many low-paid employees manage to progress? …………………………………………………………………………………………………….. Proportion that escaped, cycled and remained stuck between 2002 and 2012: Source: Resolution Foundation analysis of NESPD 1975-2012. 8
  • 9. How many low-paid employees manage to progress? …………………………………………………………………………………………………….. Table 1: Average gross hourly wage (excl. overtime) in 2002 and 2012, by low pay category 2002 2012 Escapers £4.82 £11.22 Stuck £4.59 £6.43 Cyclers £4.77 £9.00 £12.38 £17.42 Non-low paid Source: Resolution Foundation analysis of NESPD 1975-2012. 9
  • 10. How has this changed over time? …………………………………………………………………………………………………….. Figure 4: Proportion of employees that escape, cycle or remain stuck over the subsequent decade (1975-2002) Source: Resolution Foundation analysis of NESPD 1975-2012. 10
  • 11. Key factors associated with escaping low pay …………………………………………………………………………………………………….. • Those in sustained, stable employment are more likely to progress • Those predominantly working… – part-time – in private sector – for very small employers (<10 employees)  ….. are less likely to progress • Those already previously stuck on low pay are also less likely to progress 11
  • 12. Key factors associated with escaping low pay …………………………………………………………………………………………………….. • Low paying industries and occupations seem to offer less opportunity for progression • Employees who frequently switch jobs are less likely to progress • Women and older workers appear to face particular barriers – Even after controlling for all these other factors 12
  • 13. In summary…. …………………………………………………………………………………………………….. • For many low pay is a long-term reality – • This isn’t something only affecting young people But not all low workers get stuck – Some move quite significantly up the earnings scale • Women face particular barriers • As things stand, for lots of low paid workers progression will require moving out of dead-end jobs – – Lessons from the public sector? Can we improve pay mobility within these ‘sticky’ industries and occupations, especially for those in very small firms? 13
  • 14. …………………………………………………………………………………………………….. Stuck on the ground floor or climbing the stairs? Who gets stuck on low pay, who escapes and what makes the difference? Alex Hurrell Frances O’Grady Sir Charlie Mayfield Matthew Taylor Vidhya Alakeson (Chair) @resfoundation #movingup
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