Escape Plan: Understanding who progresses from low pay and who gets stuck

Published on Wages & Income

Our findings highlight that employees can move into higher paying roles but escaping completely from low pay is more difficult. Overall, the evidence presented in the report suggests that employers and government do have scope to develop the progression prospects of low paid staff. While much is already being done, there are particular groups of people – part-timers, single parents, employees outside of large companies – who are not feeling the benefits.

The report argues that employers and government alike should review their policies and approaches to pay progression to ensure that this large part of the UK’s workforce is not denied the opportunity to move up in work. But the research also revealed that in many ways, progression is just one part of the wider low pay story, with small wage increases for perceived significant increases in responsibility discouraging many from moving off the first rung.

  • For the majority of low paid workers, their jobs do not appear to be a first rung on a ladder to meaningfully higher earnings. This new analysis replicates our previous finding that three in four people fail to escape from low pay but has also added a number of important additional insights.
  • Our data analysis concludes that staying in employment is the most important factor in order to progress. Despite this, the largest group among those who do not progress are regularly in work. Although they will be far from homogeneous – some in work every single year of the decade with others only for six – it may be that the barriers facing this group and the support they require are different to those who have more difficulty finding steady employment. Pilots run by DWP, UKCES and the Greater London Authority exploring the development of progression should all help to deepen our understanding of how best to assist working non-escapers.
  • The proportion of employees who escape varies widely across sectors. While our regression analysis shows that working in hospitality is negatively linked to escaping low pay, it is clear that within industries, sub-sectors are performing very differently. While to some extent this may be the result of other important factors such as the share of large firms within the sector, it is interesting that sectors with similar profiles in terms of predominant business models and levels of low pay produce such a gulf in results. Previous Resolution Foundation research has recommended that the Low Pay Commission investigate blockages to higher pay within sectors and it may well be that progression could form an important consideration within that work. Examples such as the taskforce on the cleaning industry and its practices established by the Equality and Human Rights Commission could point the way towards improved pay progression within sectors.
  • Part of the reason that many of these people who are usually in employment do not progress may be to do with the limited appeal of moving into positions of greater responsibility. The limited pay increases received for moving from an entry-level position to a supervisory role were often as little as 30p or 40p extra an hour. When weighed against the additional stress which comes with the role and the hassle of rearranging their work-life balance, for many people progression may not appeal. Pay progression is sometimes framed as its own issue, separate from wider concerns around low pay. The evidence of this report suggests however that we cannot understand the barriers and enablers of progression without placing it within the context of the UK’s chronic low pay problem.
  • While three-quarters of people regularly in work do not escape from low pay over a ten-year period, some groups appear to be particularly disadvantaged. Those working part-time, single parents, older workers and people with disabilities seem to find escaping from low pay especially difficult. Employers and government should consider how current support and funding could be better targeted at these groups to understand the obstacles preventing them from progressing and to assist them in their careers.
  • That said, it was clear from the interviews and focus groups with low paid staff and their managers that many employers – particularly larger ones – do make an effort when it comes to progression. Progression policies are in place and a handful of examples of positive approaches are outlined in the body of the report. But the discussions did highlight how important it is to ensure that the policies are working effectively, particularly for staff members who may not be able to commit to the complete flexibility which some employers appear to require in order to progress. It is clear that many employers have already put much time and money into the training and development of low paid staff. The finding that the impact of training on pay progression is limited underlines the need for employers to ensure their policies are effective.
  • While employers are most directly involved in pay progression, government also has an important role to play. One area in which the two intersect will be the in-work conditionality element of Universal Credit, which if managed well could be a useful mechanism through which pay progression could be furthered. Previous Resolution Foundation work has set out how the National Minimum Wage could do more to boost the wages of the UK’s lowest paid workers. But moving to a higher wage-floor without considering how we boost opportunities for pay progression would be short-sighted. A broader low pay strategy which faces up to problems in the main low paying sectors is badly needed to tackle a problem which has dogged the UK for decades. The Resolution Foundation will publish a low pay manifesto in early 2015 setting out a variety of policies aimed at those on low pay.

 

Which sectors appear best placed to progress within? There are three considerations to bear in mind:

  • Starting salaries – the first bubble in the chart
  • Opportunities for progression – the size and spread of the bubbles across the chart
  • Rewards for progression – the trajectory of the bubbles across the chart

manufacturing

Even in the occupation with the lowest median pay in manufacturing, the majority of workers at that level earn above low pay. Moving up occupations seems to bring with it reasonable pay increases and the bubbles are relatively evenly sized suggesting there are higher paid positions to move into.

accomodation-and-food-services

In accommodation and food services on the other hand, the first bubble is well below the low pay threshold. It takes a number of steps up the occupational ladder to move out of low pay and by far the largest number of jobs are in the lowest paying occupation suggesting there are fewer higher paid occupations to move into.wholesale-and-retail

health