OPPORTUNITY IN THE
WORKPLACE
LOW-WAGE EMPLOYMENT IN EUROPE
AND THE UNITED STATES
Ken Mayhew
Caroline Lloyd
Susan James
BACKGROUND

Russell Sage Foundation Projects in the
US

LOW WAGE AMERICA, 2004, edited by

RSF commissioned comparable studies in
Europe
Eileen Appelbaum, Annette Bernhardt and
Richard Murnane
THE EUROPEAN STUDIES

5 countries: UK, France, Germany, Netherlands,
Denmark

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

STAGE 1

STAGE 2
Proportion of employees below LPT across the 5
countries
FR
GER
NL
DK
UK
Year
2002
2004
2002
2002
2002
%
employees
below LPT
12.2 *
20.8
17
8.5
22.1
% male
employees
below LPT
8.0 *
13.8
6.5
(approx)
13.2
% female
employees
below LPT
17.0 *
21.1
10.5
(approx)
31.3
* refers to
Proportion of UK workforce falling below LPT,
1975-2005
Percent of workforce below low pay threshold
35
30
25
Men-NES
Women-NES
20
Total-NES
Men-ASHE
15
Women-ASHE
Total-ASHE
10
5
0
1975
1978
1981
1984
1987
1990
Year
1993
1996
1999
2002
2005
THE GROWTH OF LOW PAID WORK

The rise in earnings inequality generally

The decline of trade unions

The removal of legislation and institutions which
had provided some protection for the low paid
Distribution of low-paid employment in the
UK economy, analysed by sector
SIC code
Sector
% of total lowpaid employees
in UK economy
52
Retail
26
49
85
Health services
13
18
55
Hotels
12
59
15-37
Manufacturing
9
13
80
Education
8
16
90-93
Social and community services
7
29
74
Cleaning, security and miscellaneous business
services
6
18
60-64
Transport and communications
5
13
50-51
Wholesale
5
22
45
Construction
3
13
65-73
Other private services
3
8
75
Public administration
2
6
01-14; 4041
Other industries
1
15
TOTAL
Source: Labour Force Survey
100
% of employees
in sector earning
below LPT
Proportion of employees earning less
than 2/3 of median hourly wages,
1976-2001
Percentage of group who are low paid
Full-time
Part-time
Male
Female
PT
FT
Total
Male
Female
Male
Female
1976
6
26
41
33
6
27
34
12
14
1981
6
24
42
46
7
30
46
12
16
1986
8
24
54
52
9
31
52
13
18
1991
9
22
53
50
10
29
50
14
19
1996
11
22
54
50
13
30
51
15
21
2001
11
20
54
49
13
29
50
15
21
Proportion of employees earning less than
2/3 of median hourly wages,
1976-2001, analysed by age group
Percentage of age group who are low paid
16-24
25-29
30-39
40-49
50-59
60 plus
Total
1976
31
7
9
10
10
18
14
1981
30
7
10
13
14
21
16
1986
35
10
12
14
15
22
18
1991
35
12
13
16
18
29
19
1996
44
16
15
16
21
34
21
2001
46
16
15
16
20
35
21
Source: New Earnings Survey Panel Dataset.
Employees earning less than 2/3 of
median hourly wages, 1991-2001,
analysed by selected occupational group
New Earnings Survey (SOC 1990 classification)
% of occupation group who
are low paid
SOC
1990
1991
1996
2001
640
Assistant nurses, nursing auxiliaries
14
17
15
641
Hospital ward assistants
31
33
39
720
Sales assistants
66
66
66
721
Retail cash desk and check-out operators
65
74
78
800
Bakery, confectionery process operatives
41
38
46
809
Other food, drink and tobacco process operatives
23
23
25
958
Cleaners/domestics
67
73
76
% of occupation group who
are low paid
SOC
2000
2005
6111 Nursing auxiliaries and assistants
19
7111 Sales and retail assistants
75
7112 Retail cashiers and check-out operators
78
7211 Call centre agents/operators
27
8111 Food, drink and tobacco process operatives
31
9233 Cleaners, domestics
76
Annual Survey of Hours and Earnings (SOC 2000 classification)
Earnings experience of workers in lower
quartile (Q1) of earnings distribution in
1977, 1984 and 1991
1977- 83
1984 - 90
1991- 97
Total
% in Q1 in Year 1 who were still employed and still in
Q1 in Year 7
50.9
49.6
40.1
Total
% in Q1 in Year 1 who were still employed and still in
either Q1 or Q2 in Year 7
79.6
79.8
82.8
Males
% in Q1 in Year 1 who were still employed and still in
Q1 in Year 7
28.0
33.8
29.8
Males
% in Q1 in Year 1 who were still employed and still in
either Q1 or Q2 in Year 7
61.4
66.4
74.4
Females
% in Q1 in Year 1 who were still employed and still in
Q1 in Year 7
83.1
56.9
45.3
Females
% in Q1 in Year 1 who were still employed and still in
either Q1 or Q2 in Year 7
97.6
86.0
87.1
Source: McKnight, 2000, Tables 6.4-6.6
Methodology
Call Centres
Food Pro-cessing
Hotels
Hospitals
Segments

4 finance
 4 utilities

3 meat processing
 3 confectionery

3 4* chain
 1 5* chain
 2 Budget chain
 2 2-3*
independent

Focus

in-house v
outsourcing
 union v nonunion

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*

No.

68 interviews

Interviews

GM
 Op Manager
 HR Manager
 Housekeeping
Manager
 Housekeeping
Supervisor
 Room
Attendants

129 interviews

Managers
 HR Managers
 Team Leaders
 customer
service agents
 Union reps
 Managers of
temp work
agencies

70 interviews
Managers
 Team Leaders
 supervisors
 Operatives
 Union/Employee
Reps


Retail
7 NHS hospitals

geographical areas
 in-house v. outsourced

54 interviews
Finance Managers
 HR Managers
 Nursing managers
 domestic services
managers
Temp work bank
managers
 Assistant nurses
 Cleaners
4 food retailers
 4 electrical
retailers
High quality v
low-priced
products

58 interviews
Managers in HQ
 Store managers
 Jr store managers
 Supervisors
 Sales assistants &
check-out operators

Food processing
 Turnover of £58 billion in 2004
 6,000 companies employing 385,000 workers
 Exports accounted for only 15% of sales in 2004
 The ‘Big Four’ account for 70% of all food sales
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
Issues of pay
Chocs
Novelty
Median Pay
5.64
6.45*
% Workers
below LPT
83%
Clucks
Ltd
Poultry
Co
7.22
6.03*
6.71*
7.61
(mean)
41%
0%
63%
29%
Below
10%
5.05-5.52
5.05-5.60
5.05
5.05
5.05
5.05
Agency below
LPT
100%
100%
100%
100%
100%
100%
Team Leader
Pay
(highest)
8.45
7.61*
12+*
7.38*
8.27*
na
Agency
Pay
*Alternating 2 shifts
LPT = £6.37
na = data not available
Minty
Baconco
Issues of pay
You would struggle…especially if you are the main earner...I mean it doesn’t
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 he’s disabled so he can’t 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. It’s as simple and straightforward
as that. It’s not a case of want, it’s a case of need’ (Shop Steward, Baconco)
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
What are the jobs like?
 Pay depressed
 Working harder
 Benefits cut
 Heavy reliance on foreign workers
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
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
Issues of pay
H1
H2
4 star
deluxe
H5
2/3 star
H6
2/3 star
H7
4 star
deluxe
Pay
£5.05 per Salaried
hour
= £6.16
per hour
£1.72 per £5.05 per £5.05 per £5.05 per £2.47 per
room
hour
hour
hour
room
117
186
380
111
31
60
No. of
14 per 8
rooms to hrs
clean
11 per 8
hours
16 per 4
hours
14 per 8
hours
9 per 4.5
hours
16-18 per 10-15 per
5 hours
5-6 hours
approx.
approx.
No. of
RAs
30 = 25
f/t, 5 p/t
31 = 23
14 f/t
5 f/t
4 f/t
14 f/t
2/3 star
H4
Star
rating*
Rooms
in hotel
5 star
H3
(approx.
£6.88 p/h)
contract
cleaning
employees,
8 TWA
2/3 star
budget
(approx
£5.61 p/h)
60
4 f/t
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 don’t want
to come into the hotel industry…I think it is all down to pay…if
you can sit in Tesco’s 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)
Recruitment
 No
qualifications required
 Heavy use of agencies in London
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 it’s 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)
 Local women in Scotland
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
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 hotel’s 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
Call centres
Call centre agents
 10% paid close to NMW
 30% paid below LPT (40% part-timers)

8 Cases
Financial services & utilities (2 outsourcers)
 In-bound, mass market

Call centre jobs




call length: 2.5 - 6 minutes
number of calls: 50-120 per day
tightly monitored & controlled
1-6 weeks initial training
‘so tedious, it was like watching paint dry’ (Agent F4)
‘I think it’s just the nature of the job at the end of the
day… the fact that you’re in a call centre and you’re
taking non-stop calls… It’s just some people can do that
for a long period of time and others can’t’ (Agent F3)
Improving job quality?
6 companies: quality issues & labour turnover
 Response:

–
–
–
–
Less agency workers
Pay increases
Improve working time
Other activities, eg. employee involvement, social
events, training
No changes to job design
 ‘Revolving door’ mentality

Retail sector

26% of all low paid workers are in retail

70% check out operators & sales assistants below LPT

Intense competition but increasing concentration &
largely profitable
Cases

Food retailers & electrical/ electronic goods

High quality v low price
General trends
Food
 No qualifications
 Customer service
skills
 2-5 days training
 Part-time women on
shifts + students etc.
 Lack of opportunities
for part-timers
Electronics
 No qualifications
 Product knowledge
 2-5 days training
 Full-time men on
shifts + overtime
 Some opportunities,
eg. management
development
Hospitals
17% nursing assistants & 56% cleaners < LPT
Cases


NHS
In-house & outsourced
Key Developments




Major increase in spending followed by budget constraints
Agenda for Change – national pay scales, job ladders, end of two
tier system
Improved pay
Other benefits, eg. sick pay, pensions, holidays, unsocial hours
payments
Nursing Assistants






No qualifications but
GCSEs Maths & English
preferred
Downward mobility
Job ladders improved
NVQ2 & 3
Pay differentials narrowed
with cleaners
Lack of posts
Cleaners

No qualifications

‘reasonable standard of
literacy & numeracy’

Downward mobility

No incentives to train

Outsourcing barrier to
progression
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.
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)
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)
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’
(Report in TES 23 June 2006 p1)
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, 22nd Report,
2007)
Recruitment criteria
Call centre agent
Qualifications - NONE
Other – ‘Attitude’, personality, ‘staying
power’

Food processing operative
Qualifications – NONE
Other - Basic English, dexterity

Recruitment criteria
Hotel room attendant
Qualifications – NONE
Other – NONE

Nursing assistant
Qualifications – GCSE Maths/English
preferred
Other – Experience in caring

Recruitment criteria
Sales assistants
Qualifications – NONE
Other – ‘attitude’, ‘friendliness’,
communications skills, basic literacy and
numeracy.

Example 1
So I suppose you don’t need to be perfect
for English, well, not English but maths
and everything but as long as you can sort
of read ‘Danger’ and don’t walk in front of
the [machine] that sort of thing.
(Line operative, female, poultry processing
factory, previously worked as a nanny
(trained) & chip fryer)
Example 2
We are not so much interested in product knowledge,
because you can train that. For me it’s about flexibility…
because we do operate eight to eight, Monday to
Saturday. … It’s about attitude. It’s about telephone
manner. But again, you can train that. It’s 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)
Qualification levels

Majority of workers had few/ no qualifications –
process operative, hotel and hospital cleaners,
retail

Significantly levels of over-qualification – call
centres, hospitals, migrant workers
– Call centres: graduates/ A levels etc. (transitory job)
– Hospitals: women returners

Downward occupational mobility
Examples of previous jobs

Assistant nurses
–
–
–
–
–

Dairy farm manager (own business)
Shop manager, Cable TV sales
Aerobics teacher
Owner of hair salon
Accounts clerk
Cleaners
– Accounts/bookkeeping
– Retail supervisor/ Tailor
– Qualified (level 3) nursery nurse
Hotel room attendants
RAs interviewed in a five star hotel outer London





RA1 Polish - studied economics at university &
worked in a bank
RA2 Polish – retail supervisor
RA3 Vietnamese – no formal qualifications
RA4 Slovakian – degree in accounting
RA5 British – studied childcare at college –
dropped out
Progression opportunities for low
paid workers
Very limited 1:15 – 1:30?
 Flat organisational structures
 Supervisory/team leaders but little extra
pay
 Rare opportunities for part-timers
 Managers – graduates cascading down
through labour market into 1st line
manager jobs

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.
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 can’t get the people. Even
if you get the numbers, you can’t get the quality.
They will turn up for a couple of days and then won’t
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)
Qualifications, training and progression

No qualification requirements

Many ‘over-qualified’ workers

Lack of trust in qualifications?

Lack of positions not unwillingness to train
Conclusion
Jobs very simple, easy to learn, Taylorist
 Jobs require little training
 Most employers will train at lower levels if
its needed
 Abundant labour supply removes
constraints
 Regulatory constraints minimal
 What about ‘displaced locals’?

Are jobs getting better or worse?
Better
Hospitals
Worse
Call
centres
Retail
Hotels
Food