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The Bottom Half and the Dangers of Labour Market Polarisation Challenges for Policy

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Title: The Bottom Half and the Dangers of Labour Market Polarisation Challenges for Policy


1
The Bottom Half and the Dangers of Labour
Market Polarisation Challenges for Policy
  • Ewart Keep
  • ESRC Centre on Skills, Knowledge Organisational
    Performance
  • University of Warwick

2
INTRODUCTION
  • The dangers of over-expectation
  • Skills for economic success
  • Skills for social justice
  • Skills as a substitute for a strong industrial
    policy and welfare state.

3
THE FUTURE ECONOMY AND LABOUR MARKET ROSY
PROJECTIONS AND HARSH REALITIES?
  • The Knowledge Economy
  • Living on Thin Air
  • Shifts in the labour market and an end to low
    skilled work
  • The near universal adoption of best practice
    employment policies, rather than fit.
  • The danger of get out of jail free narratives
    that predict the inevitable end of unpleasant
    things and the arrival of nice things.
  • The temptation to just sit back and watch the
    future arrive.
  • All contain elements of truth, but tend to miss
    out counter forces and much of the less good news.

4
SOME PROBLEMATIC REALITIES
  • The Persistence of Low Road Competitive
    Strategies in Some Firms
  • The Growing Polarisation of the Labour Market
    (More Good AND Bad Jobs)
  • Mass Higher Education and Its Interaction with
    the Labour Market

5
problematic realities continued
  • All three areas raise major questions about what
    will be on offer in terms of
  • Jobs
  • Pay
  • Career Prospects/Employability
  • Learning Opportunities
  • For those in the bottom half of the educational
    achievement range and labour market (especially
    the bottom 25).

6
THE PERSISTENCE OF COST-BASED, LOW-SPEC
COMPETITIVE STRATEGIES
  • DTI Research
  • Two large sectors, both of significant economic
    importance and employing substantial workforces
  • Hotels (business)
  • Food Manufacture
  • In two English regions East and West Midlands.

7
continued
  • Findings
  • In both regions and sectors, the research showed
    that many firms were competing largely on price,
    producing low-spec, relatively low quality
    products and services. Many firms saw no need
    and/or possibility of change.
  • The skill requirements (and hence workplace
    learning opportunities) for the bulk of the
    workforce were often very low.

8
ARE THE FINDINGS A ONE-OFF?
  • It is important to underline that the findings
    from this study replicate other findings
  • Earlier NIESR studies
  • National Skills Task Force Research
  • Porter Report for DTI on UK Competitiveness
  • Russell Sage Foundation project in USA
  • They also reflect a wider ambiguity in UK
    approaches to competitiveness

9
LOW WAGE, LOW PRODUCTIVITY ALL RIGHT FOR SOME?
  • David Blunkett (at DfES)
  • Denial that low skill jobs still exist and/or
    can persist.
  • David Blunkett (Home Secretary)
  • Says we need large numbers of migrant workers
    from EU Accession States to, meet those big
    areas for unskilled employment, like low-level
    hospitality and catering.
  • Which model are we following
  • 1. Scandinavian (prosperity for mass of
    population)
  • 2. USA (prosperity for minority, mass of lowly
    paid service workers underneath)

10
NSTF RESEARCH
  • In 1999, a representative sample of firms was
    asked if
  • We are implementing or about to implement, plans
    to move into new higher quality product or
    service areas with higher profit margins
  • Was very applicable or fairly applicable to
    them.
  • 60 per cent said not. They were quite happy
    where they were and were not panning to change
    their strategies.

11
LOW WAGE UK
  • At present, about 25 per cent of the UK workforce
    is low waged on the EU definition (those earning
    less than 60 per cent of median wage).
  • These jobs are not set to vanish!

12
THE PORTER REPORT ON UK COMPETITIVENESS CONCLUDED
  • The UK currently faces a transition
  • to a new phase of economic
  • development. The old approach to
  • economic development is reaching the
  • limits of its effectiveness, and government,
  • companies and other institutions need to
  • rethink their policy priorities..We find the
  • competitiveness agenda facing UK leaders
  • in government and business reflects the
  • challenges of moving from a location
  • competing on relatively low costs of doing
  • business to a location competing on unique
  • value and innovation. This transition requires
  • investments in different elements of the
  • business environment, upgrading of company
  • strategies, and the creation or strengthening of
  • new types of institution.
  • (Porter and Ketels, 2003 5).

13
BUT THE UK GOVERNMENTS TRADE AND INVESTMENT
WEBSITE SALES PITCH FOR US AS A BASE FOR FDI IS
  • Total wage costs in the UK are among
  • the lowest in Europe.In the UK
  • employees are used to working hard for
  • their employers. In 2001 the average hours
  • worked a week was 45.1 for males and 40.7
  • for females. The EU average was 40.9 hours
  • ..UK law does not oblige employers to provide
  • a written employment contract.The law
  • governing conduct of employment agencies is
  • less restrictive in the UK.The UK has the
    lowest corporation tax rate of any major
    industrialised country.
  • i.e. Come to a low cost location.
  • Path dependency (circa 1989) in action!
  • How plausible given the new EU accession states?

14
OVERVIEW
  • 1. The causes of cost-based competitive
    strategies appear to be structural and deeply
    embedded in the economy.
  • 2. Firms are responding to the markets and
    incentives facing them. Current strategies are
    delivering to them reasonable profits and
    business success.
  • 3. Most firms are not contemplating making a step
    change in product market strategy because they
    see no need to do so, and because such a strategy
    might be risky.

15
THE IMPLICATIONS FOR POLICY GENERAL LESSONS
  • Low wage, low costs competitive strategies can
    still work. Low wage, low skill employment is
    not set to vanish of its own accord in the UK.
  • There are no quick fixes available. Firms are
    acting rationally and until incentive structures
    change, their behaviours and strategies will not
    either.
  • We are close to reaching the limits of what can
    be achieved simply through boosting skills
    supply.
  • We probably need a new approach that over time
    helps more organisations to move towards higher
    value added production. The means to achieve
    this are not yet clear.

16
BREAKING THE CIRCLE
  • Income Distribution
  • The structure of income distribution in the UK
    produces a domestic market in which many people
    can only afford to buy goods and services chiefly
    on the basis of price rather than quality,
    customisation or specification.
  • The DTI case studies demonstrated, particularly
    with respect to food, what price based
    competition can mean for competitive and skills
    strategies. These strategies in turn produce low
    waged workers, who can only afford.

17
BREAKING THE CIRCLE.
  • Most firms are focused on meeting demand from the
    domestic market.
  • Focus for product market Percentage
  • Local 39
  • Regional 21
  • National 29
  • International 10
  • SOURCE Mason, 2003

18
BREAKING THE CIRCLE.
  • Most firms rely on UK consumers, many of whom
    have limited purchasing power.
  • Most firms will thus regard international
    comparisons (e.g. of productivity) as irrelevant
    to their goals and competitive strategies.
  • Globalisation may have very limited impact on
    domestic markets, especially for many
    inter-active services (e.g. hotels)

19
BREAKING THE CIRCLE.
  • Challenges for Skills Policies
  • The objectives of national skills policies tend
    to set up conflicting objectives.
  • On the one hand they impose a need to plan to
    meet existing employer demand for skills (as
    defined by employers).

20
BREAKING THE CIRCLE.
  • On the other, they assume the provision of
    quality jobs for the local workforce. The
    problem is that many of the jobs that exist in
    many local economies within the UK do not
    necessarily offer much in the way of quality if
    measured in terms of
  • Intrinsic interest and job satisfaction
  • Task variety
  • Discretion and job control
  • Pay and working conditions
  • Opportunities for training and development
  • Opportunities for progression

21
THE GROWING POLARISATION OF THE LABOUR MARKET
22
polarisation continued
23
polarisation continued
24
IMPLICATIONS FOR SKILLS DEVELOPMENT
  • Research indicates that there is a strong
    relationship between
  • Work organisation
  • Job design
  • Task discretion
  • AND
  • Opportunities for learning on and through the job
  • We now have the means to identify workplaces
    where learning environments are rich (expansive)
    or poor (restrictive).

25
POLARISATION OF PRODUCT MARKET STRATEGIES AND JOB
QUALITY
  • The gap between the
  • Best/Worst Firms
  • Leading Edge/Trailing Edge Practice
  • Best/Worst Jobs
  • Is widening
  • CONSEQUENCE One size fits all interventions
    will produce sub-optimal results!

26
MASS HIGHER EDUCATION AND SOCIAL JUSTICE
  • The Skewed Pattern of Access to HE
  • The Skewed Pattern of Access to Elite HE
  • Opportunities for the Bottom Half
  • 50 per cent, year on year, cascading through the
    labour market.
  • Positional goods and the battle for good and
    better jobs.
  • The effects will be cumulative.

27
THE EXPANSION OF HIGHER EDUCATION- A TRIPLE
WHAMMY FACING THOSE FROM LOWER SOCIO-ECONOMIC
GROUPS
  • 1. Access to blue chip graduate jobs favour elite
    university students and those with much social
    capital.
  • 2. Over time, among the rest of jobs where
    qualifications count, graduates will tend to
    crowd out non-graduates, and unless access to HE
    shifts, this will favour those from higher social
    groups.
  • 3. In many of the better interactive service
    jobs, where qualifications are relatively
    unimportant, employer requirements for social
    capital and personal characteristics will again
    tend to favour offspring of middle class.

28
SOME POSSIBLE IMPLICATIONS
  • 1. The Need to Develop and Deliver a Different
    Pattern of Employment
  • A long term project to create a high wage, high
    skill economy for the vast bulk of the workforce.
  • 2. Strategies for Job Quality The Good Job as a
    Social AND Economic Goal
  • Lessons from Scandinavia
  • Levers..?
  • The public sector as a leader?

29
implications continued
  • 3. Balancing Resourcing between Routes and
    Learners
  • 4. Targeting Those (Organisations and/or People)
    Most in Need
  • If resources are scarce, where best should they
    be placed?
  • What should be the criteria for deciding?
  • How, where and when should learning be delivered?

30
implications continued
  • 5. The Division of Responsibilities
  • What can be expected of employers? Should
    public funds support job-related learning?
  • 6. Learning for Life as Well as Learning for Work
  • Remotivating those at the bottom may need to
    start with life outside work rather than in the
    workplace.

31
GENERAL IMPLICATIONS
  • Whatever policies are adopted, the need is for a
    long term view.
  • There are no quick fixes.
  • A substantial adjustment to product market
    strategies and job quality might take 10-15
    years.
  • The kind of transformation being aimed at
    requires considerable political commitment (at
    national and local level) and will need buy in
    from a wide range of actors.
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