Supporting low-paid Londoners to progress in work

Tony WilsonCentre for Economic and Social Inclusion

tony.wilson@cesi.org.uk@tonywilsoncesi

The challenge (1)Unprecedented collapse in wages – London and UK

Source: Annual Survey of Hours and Earnings

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

Annual change in median hourly earnings, 2012 constant pricesUK London (residents)

The challenge (2)For first time, most adults in poverty in working

households

Source: Households Below Average Income

01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/120

10

20

30

40

50

60

70

Share of those in relative poverty by economic statusOne or more adults in work No adults in work

The challenge (2)For first time, most adults in poverty in working

households

Source: Households Below Average Income

01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/120

10

20

30

40

50

60

70

Share of those in relative poverty by economic statusOne or more adults in work No adults in work

The challenge (3)Big rise in number in involuntary part-time or temp

work

Source: Labour Force Survey

2002 JAN 2003 JAN 2004 JAN 2005 JAN 2006 JAN 2007 JAN 2008 JAN 2009 JAN 2010 JAN 2011 JAN 2012 JAN 2013 JAN0

500

1000

1500

2000

2500

Number in part-time or temp work because cannot find full-time job

So overall...

Headline economic recovering masks challenges:– Falling earnings– Stagnating living standards– Increasing working poverty– Increasing job insecurity

Ensuring policy and practice supports retention and progression is more important than ever

Key findings – low pay

21% of London workers (625,000 people) paid below LLW

Low pay is becoming more prevalent and entrenched:

Change in employee numbers and median hourly pay for occupations with median hourly pay below LLW, London, 2006–11

Bar staff

Waiters & waitresses

Cleaners & domestics

Sales & retail assistants

Retail cashiers & check-out operators

Labourers (process & plant)

Chefs & cooks

Market research interviewers

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-10% -5% 0% 5% 10% 15% 20%

Change in e

mplo

yee n

um

bers

Change in median hourly pay

National median change in pay

Rising jobsFalling pay

Rising jobsRising pay

Falling jobsRising pay

Falling jobsFalling pay

Some groups more likely than others to be low paid

Overa

ll

50-6

4 ye

ar o

lds

Fem

ales

Disabl

ed p

eopl

e

BAME gr

oups

Lone

par

ents

16-2

4 ye

ar o

lds

No qu

alifi

catio

ns0%

10%

20%

30%

40%

50%

60%

Proportion in work earning below Living Wage (London)

Also need to look at persistence...

571,000 Londoners ‘stuck’ in low pay for +1 year, 5.4 million people across the UK

164,000 Londoners at risk of cycling between work and low pay, 1.2 million people nationally – especially young people and those with no qualifications

Snapshot of people’s status in the labour market, London and UK, Apr 2012–Mar 2013

912,000 6,913,000

203,000 1,432,000

111,000 733,00054,000 506,000

571,000 5,406,000

2,358,000 17,635,000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

London UK

Economically inactive

Unemployed, not worked within past year

Unemployed, having been employed within past year

In employment, earning below living wage, moved from unemployment within past year

In employment for more than one year, earning below living wage

In employment, earning living wage or above

'At risk of cycling'

Figure 3.8: Proportion of low-paid people whose annual hourly wage growth is less than the national median, London and UK

29%

36% 37%

28%

32%30%

32%33%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2006-07 2008-09 2010-11 mid-2011-mid-2013

London UK

Many of the low paid progress more slowly

Wage progression more likely for those starting in low pay (median hourly wage growth of 10% annually)

But around on third of low- paid workers don’t see wage progression:

Changing jobs, and receiving on-the-job training, both seem to matter

Poor progression for different groups:

Overall Females 16-24 year olds BAME groups Disabled people

Lone parents People with no qualifications

0%

10%

20%

30%

40%

50%

60%

70%

Proportion of low paid with hourly wage growth below medianLondon UK

Views from the front line

A number of the unemployed people and low-paid workers we spoke to did not aspire to progress, and were satisfied with current (or previous) jobs

Others felt that the industries they worked in did not present progression opportunities

Salary considered the most important benefit of progression, alongside job satisfaction, confidence and job security:

Focus group participants’ prioritisation of positive aspects of progression

What may work?We looked at four case studies: RCT Homes – the transition into work

– Focus on soft skills through ‘Can Do Toolkit’– ‘Progress Tree’ to support progression

Renovo – staying in work– Work coaches and ‘Workfriend’ – multiple channels, personalised

pwc – retention and progression– Employer ownership pilot– Organisational support, mentoring, focus on SMEs

Stafforce – use of career ladders– Building qualification frameworks into own workforce development

(‘The Academy’)

Also reviewed range of evidence from UK and internationally

All suggests two key factors in our control:

The individual

Effective case management

Training support Financial incentives

The employer

Management and support systems

Staff culture and behaviour

Company factors

Which means...

Supporting people to stick and then stay in work by getting the job match right, personalising support, and supporting people through the transition to work

Supporting people to progress in work by personalising support to the individual’s needs (including job-related training and financial incentives)

Providing the right (business to business) support to employers to grow their workforce and their business

In practice: Targeting:

– Identifying those most at risk – particularly lowest qualified, caring responsibilities, many young people, poor work histories, certain occupations and sectors...

Joining up:– Some opportunity with JCP London, but most of ‘target’ group not on

DWP benefits– Engaging through LEPs, employer networks, local contacts– Joining up across skills, employment, employer engagement

Case management led:– Employee – confidence, motivation, networks, goals, skills– Employer – HR, recruitment and retention, leadership, management

Additional support:– Training – scope to use FE loans?– Brokerage – finding a new job?– Incentives to progress – how??

Questions for discussion

Does this ring true for you?What do you think works?What are the key barriers to going

further or doing more?What don’t we know?How do we take this further?

Supporting low-paid Londoners to progress in work

Tony WilsonCentre for Economic and Social Inclusion

tony.wilson@cesi.org.uk@tonywilsoncesi