Title: The Bottom Half and the Dangers of Labour Market Polarisation Challenges for Policy
1The Bottom Half and the Dangers of Labour
Market Polarisation Challenges for Policy
- Ewart Keep
- ESRC Centre on Skills, Knowledge Organisational
Performance - University of Warwick
2INTRODUCTION
- 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.
3THE 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.
4SOME 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
5problematic 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).
6THE 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.
7continued
- 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.
8ARE 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
9LOW 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)
10NSTF 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.
11LOW 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!
12THE 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).
13BUT 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?
14OVERVIEW
- 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.
15THE 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.
16BREAKING 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.
17BREAKING 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
18BREAKING 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)
19BREAKING 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).
20BREAKING 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
21THE GROWING POLARISATION OF THE LABOUR MARKET
22polarisation continued
23polarisation continued
24IMPLICATIONS 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).
25POLARISATION 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!
26MASS 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.
27THE 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.
28SOME 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?
29implications 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?
30implications 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.
31GENERAL 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.