How alternative employment contracts affect low wage workers

a post by Nikhil Datta (University College London, UK and Centre for Economic Performance, London, UK), Giulia Giupponi (Institute for Fiscal Studies, London, UK) and Stephen Machin (London School of Economics, UK and Centre for Economic Performance, London, UK) for the OUP blog


Eggtimer by Storkman. Public Domain via Pixabay.

Contemporary labour markets are characterised by more atypical or alternative work arrangements. Some of these – like independent contractors – have emerged in the context of self-employment, while others – like zero hours contracts and temporary work – are evolutions of traditional employment contracts. Irrespective of its form, the increase in atypical work has led to discussions of a trade-off between the potentially desirable flexibility it offers and the emergence of low-wage, dead-end jobs, characterised by considerably fewer employment rights and less job security than conventional forms of employment.

The rise of atypical work has been a key feature of the labour market of the United Kingdom in recent years.. One kind of alternative work arrangement that is increasingly common in the UK are zero hours contracts. Under such contracts, employers are not obliged to guarantee hours or times of work, and workers are – at least in principle – not obliged to accept work offered and are paid only for the work carried out. Almost a million people in the UK work like this today, compared to only two hundred thousand at the turn of the millennium. Many of these contracts are prominent in low-wage sectors of the economy, such as hospitality and social care.

Continue reading

---

We must not ignore plight of low-paid men as once we ignored that of working women

a newspaper article by Paul Johnson published by the Institute for Fiscal Studies [via South West Skills Newsletter]

On average, women earn about 20 per cent less per hour worked than men. This persistent gap has, unsurprisingly, driven a lot of political concern, not to say outrage. It has also led to an increasing amount of research that is throwing a much clearer light on what is happening, if not on how to fix the problem.

We know that the wage gap is particularly associated with what happens in the labour market after women become mothers. They often spend some time out of work and, more importantly, often return to work part-time. In Britain, part-time work is heavily penalised. Women also tend to reduce their commuting times after they become mothers, giving them less choice of jobs and employers.

Men, on the whole, do not move to part-time work or reduce their commutes after they become fathers. Choices made within the family unit and choices made by employers over how they pay and promote those who work part-time or limited hours both matter enormously.

Continue reading

---

Reproducing low-wage labour: capital accumulation, labour markets and young workers

an article by Edward Yates (University of Leicester, UK) published in Industrial Relations Journal Volume 48 Issue 5-6 (November 2017)

Abstract

Drawing on evidence from Greater Manchester, this article examines how structural changes in capital accumulation have created particular labour market outcomes, which have led to young people becoming a source of cheap labour for the growing low-wage service economy.

Greater Manchester has been selected as a case study because of the sectoral composition of its labour market and because levels of low pay for young workers are above the national low-pay average of 40 per cent.

The research reveals that it is necessary to move beyond sociological explanations that concentrate on the ‘essential youthfulness’ of young people and instead draw on analytical categories from political economy in order to understand the structural causes of young people's material circumstances.

---

Low-wage service occupations in Europe: an inevitable underclass?

NEUJOBS Working Paper 3.7 by Moira Nelson (Lund University) published by the European Commission Seventh Framework Programme (March 2013)

Abstract

Low-wage service occupations occupy an important part of the employment structure of post-industrial labour markets and this transformation raises alarms about inequality since employment in such occupations arguably depends on weak working conditions.

This study examines trends in low-wage service employment across 19 European countries between 1992 and 2010 in order to get leverage on whether their expansion and poor quality are both as inevitable and inter-related as the literature suggests.

Full text (PDF 26pp)

---

In-Work Poverty

GINI Discussion Paper Number 51 by Ive Marx (University of Antwerp) and Brian Nolan (University College Dublin)

Introduction

While in-work poverty is not a new problem, the degree of attention it is receiving in Europe is more recent, reflecting at least two concurrent sources of concern (Andreβ and Lohmann 2008; OECD 2008; European Foundation 2010; Fraser et al. 2011; Crettaz 2011; European Commission 2011).

Deindustrialisation, intensifying international trade and skill-biased technological change are said to be threatening if not effectively eroding the (potential) earnings and living standards of some workers in advanced economies.

Yet at the same time, policy at EU level and in many countries has become focused on increasing the number of people relying on earnings, and particularly on drawing into the labour market those with the weakest education and work history profiles.

The Europe 2020 target of boosting employment rates to 75 per cent of the population aged 20 to 64 shows this drive to be undiminished. Sharply increased unemployment in some countries following on from the onset of the economic crisis has only served to increase the emphasis on getting people into jobs. In light of these trends, there would appear to be legitimate concern that larger sections of the workforce are being expected to rely on jobs that do not generate sufficient income to escape poverty.

This paper starts with a discussion of current debates about in-work poverty and underlying driving forces. It turns to issues of definition and measurement of in-work poverty, which are central to adequate analysis and policy formulation, and then examines the variation across countries and over time in-work poverty using data from EUSILC.

With low-paid work often seen as a key driver, we look at the empirical evidence first about the extent and nature of low pay, and then at its complex relationship with in-work poverty.

This brings out that in-work poverty is strongly associated not so much with low hourly pay per se but rather with single-earnership and low work intensity at the household level, as well as working part-time or part-year or on temporary contract at the individual level.

Against this background, the remainder of the paper is devoted to what policy can do to prevent or address in-work poverty, starting with an examination of what an incremental augmentation/modification of the traditional minimum income protection provisions for workers could potentially achieve.

We then ask whether innovative options such as EITC/WTC type negative income taxes offer a model for emulation. Finally we discuss the broader implications for effective anti-poverty tools and strategies, and how these may differ across institutional settings.

Full text (PDF 48pp)

Published by GINI: Growing Inequalities’s Impacts, Amsterdam Institute for Advanced Labour Studies, University of Amsterdam in July 2012

The Effect of Minimum Wages on Labour Market Outcomes: County-Level Estimates from the Restaurant-and-Bar Sector

an article by John T. Addison and McKinley L. Blackburn (University of South Carolina) and Chad D. Cotti (University of Wisconsin Oshkosh) published in British Journal of Industrial Relations Volume 50 Issue 3 (September 2012)

Abstract

We use US county-level data on employment and earnings in the restaurant-and-bar sector to evaluate the impact of minimum-wage changes in low-wage labour markets.

Our estimated models are consistent with a simple competitive model in which supply-and-demand factors affect both the equilibrium outcome and the probability of the minimum wage being binding.

Our evidence does not suggest that minimum wages reduce employment once controls for trends in county-level sectoral employment are incorporated. Rather, employment appears to exhibit an independent downward trend in states that have increased their minimum wages relative to states that have not, thereby predisposing estimates towards reporting negative outcomes.

---

Skill: the solution to low wage work?

an article by Caroline Lloyd (School of Social Sciences, Cardiff University and SKOPE Senior Research Fellow) and Ken Mayhew (University of Oxford and Director of SKOPE) published in Industrial Relations Journal Volume 41 Issue 5 (September 2011)

Abstract

During the UK Labour government’s 13 years in power, raising skill levels was seen as the principal mechanism to improve the position of workers stuck in low wage jobs. This article draws together research undertaken in low wage sectors to question the assumptions that underlay Labour’s approach to low pay.

Hazel’s comment:
It is now obvious to many people that the raising of individual skill levels does not automatically raise individual income levels nor does the raising of skill levels in general have the large impact on GDP that we were told by the previous administration that it would.
An article worth reading in full if you can get hold of it through your institution.

---