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Low-wage Labour, A European Perspective Wiemer Salverda

Workshop 8 May 2008 London. Working out of Poverty: A progressive labour market. Low-wage Labour, A European Perspective Wiemer Salverda. AIAS LoWER Amsterdam Institute for Advanced Labour Studies European Low-wage Employment Research network

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Low-wage Labour, A European Perspective Wiemer Salverda

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  1. Workshop 8 May 2008 London Working out of Poverty: A progressive labour market Low-wage Labour, A European Perspective Wiemer Salverda AIAS LoWER Amsterdam Institute for Advanced Labour StudiesEuropean Low-wage Employment Research network www.uva-aias.netwww.uva-aias.net/lower.asp

  2. A four-year five-country project- some aggregate analysis- 200 case studies: low-wage jobs in low- paying industries (Ho, Re, CC, Hp, Fo) Initiated by Russell Sage Foundation, New York, with strong stimulus from Robert Solow (Nobel Laureate Economics 1987)Five books just published & presented to John Martin (director OECD)(comparative volume including US in preparation) New Research Results

  3. Level of low-paid employment in 2005 Main Differences Within EU Incidence of low pay among employees and all, %, 2005 (national data) Germany now at par with US DK and FR far lower

  4. Level & evolution of low-paid employment The Familiar Picture:high UK, US Incidence & evolution of low pay among employees, %, 1973-2005 (national data) US around 25% UK up from 12 to 22%, steady since 1997

  5. Level & evolution of low-paid employment Steadily Low Levels:DK, FR Incidence & evolution of low pay among employees, %, 1973-2005 (national data) DK always around 9% FR slowly down to 11%

  6. Level & evolution of low-paid employment Moving up to High Levels:DE, NL Incidence & evolution of low pay among employees, %, 1973-2005 (national data) DE up since mid-1990s (full-time!) NL sharply up from 9 to 17% in mid-1990s

  7. Low pay and employment rate in 2005 Low Pay and Employment Diverge Incidence of low pay and employee employment rate, %, 2005 (national data) DK highest E-rate and lowest LWI Only FR trade-off, perhaps ...

  8. Evolution employee employment rate Contradictory Movements Pay and Jobs Employees to population (15-64) ratio, %, 1973-2005 (OECD economic outlook) DK high US up & down UK down on balance DE, FR up NL down & up (head count!)

  9. Earnings mobility Transitions out of and into Low Pay % of employees remaining/transiting in a year, pooled over 1995-2001 (ECHP) DK, FR more mobile upward DK often via no job? UK lower no-jobs stays NL frequent low-pay access

  10. 1. Main differences are now within EU, more than between US and EU • 2. Surprisingly stable levels of incidence, low as well as high (throws up very interesting questions) • 3. No prima facie relation of low pay incidence to employment success • 4. More mobility in the two countries with a lower incidence Summary 1Overall

  11. Characteristics of low pay Demographics Women Employees-to-population ratios by age, %, 2001 (ECHP, Eurostat and CPS) Youth makes most of the difference; prime age only DK exceptional UK older women (head count!)

  12. Characteristics of low pay Demographics Men Employees-to-population ratios by age, %, 2001 (ECHP, Eurostat and CPS) Youth most of the difference again; prime age DK less exceptional FR older men lower, but not because of low pay

  13. Characteristics of low pay Usual Suspects and ... Importance part-time (<35 hrs) jobs for low-wage employment, Netherlands, 1979-2005 Youth: educational system incl. grants Female 2nd earners combine with household All seek part-time jobs Part-time shares in low-wage employment, 2001 DK FR DE NL UK US 38% 21% 35% 64% 49% 39%

  14. Characteristics of low pay Determinants (selected) of probability, pooled 1995-2001 (ECHP, bold significant) Industries and Low Pay DK low risk for women, steep for age NL steep for education UK, NL part-time effects and risk of continuation

  15. Characteristics of low pay Shift-share Comparison of Low Pay Differences in low-wage incidence compared to US structure and incidence, 2001 (ECHP) Sectoral effects are small & comparable DE, NL face higher risk with US structure

  16. Evolution middle of earnings distribution Fall of Middle Hinders Pay Careers Percent of employees paid between 2/3 and 1.5 median hourly wages, 1973-2005 (various data) DE, NL strong fall, towards low pay US, UK low, declining FR may be stable (DK no data)

  17. 1. Usual suspects suffer more from low pay everywhere: youth, women, low skilled, immigrants etc. • 2. Growing part-timisation of low-wage jobs poses career problems for low-skilled school-leavers & unemployed, also for improving female hours worked (also necessitates FTE analysis) • 3. Low-wage sectors are universal and main users of part-time jobs, but comparative sectoral structure has only a small effect • 4. Declining middle affects career prospects after a low-paid start Summary 2Composition

  18. Poverty and pay Working-age Poverty and Work Low-pay threshold and poverty wages, 2005 (Eurostat) Difference of principle: labour-market pay versus worker’s household situation

  19. Poverty and pay Working-age Poverty and Work Population and employed at risk of poverty (%), importance of employed, 2005 (Eurostat) Modest aggregate differences Larger role of employed in UK, NL

  20. Poverty and pay Households’ In-work Poverty Proportion of the population in poor* households, 1984–2001 (OECD) Larger differences, and US much higher

  21. Affecting the tail of low pay Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, US 1979-2006 No effect on LWI Equal fall of MW & MW-employment

  22. Affecting the tail of low pay Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, NL 1979-2006 Strong fall of MW, less of MW jobs and (later) growth of LWI

  23. Affecting the tail of low pay Minimum Wage and Low Pay Minimum wage to median and employment at minimum wage and low pay, UK 1999-2007 Increasing MW, stable MW jobs and LWI

  24. Affecting the tail of low pay Distribution of Low Pay and MWs Very different tails and impact of minimum wage Very long tails for DE without MW, NL with youth MWs

  25. 1. Poverty and low pay are not identical though related; more research along IPPR lines is needed • 2. Minimum wage does not necessarily affect LWI • 3. Tail of low wages very different with diverging effects of MW • LOW PAY MAY BE A COUNTRY’S CHOICE BUT IT IS NOT A SINGULAR CHOICE; DIMINISHING IT MAY BE DESIRABLE FOR SEVERAL REASONS (POVERTY, PRODUCTIVITY); ITS PART-TIME-ISATION DEMANDS COMPENSATING MEASURES Summary 3Policies Overall Conclusion

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