Transcript AIAS LoWER 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
www.uva-aias.net
European Low-wage Employment Research network
www.uva-aias.net/lower.asp
UNIVERSITY OF AMSTERDAM
AIAS
A four-year five-country project
New Research
Results
- some aggregate analysis
- 200 case studies: low-wage jobs in lowpaying 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)
UNIVERSITY OF AMSTERDAM
AIAS
Level of low-paid employment in 2005
Main
Differences
Within EU
Incidence of low pay among employees and all,
%, 2005 (national data)
30
Employees only
All employed***
25
25
Germany
now at par
with US
DK and FR
far lower
23.1
22.7 22.9
20
21.7
17.6
17.1
18.8
20
15
10.4
10
11.1
8.5
5
0
Denmark
France
Germany*
Netherlands
United Kingdom United States**
*) 22.0 if estimated separately for East and West; **) estimated over CPS-ORG 2003-2005; ***) concentration of self-employed from EU-KLEMS
UNIVERSITY OF AMSTERDAM
AIAS
Level & evolution of low-paid employment
The Familiar
Picture:
high UK, US
Incidence & evolution of low pay among
employees, %, 1973-2005 (national data)
26
US
US around
25%
UK up from
12 to 22%,
steady
since 1997
UK
16
6
1973
1977
1981
1985
UNIVERSITY OF AMSTERDAM
1989
1993
1997
2001
2005
AIAS
Level & evolution of low-paid employment
Steadily Low
Levels:
DK, FR
Incidence & evolution of low pay among
employees, %, 1973-2005 (national data)
26
US
DK always
around 9%
FR slowly
down to 11%
UK
FR
16
FR
oecd
DK
6
1973
1977
1981
1985
UNIVERSITY OF AMSTERDAM
1989
1993
1997
2001
2005
AIAS
Level & evolution of low-paid employment
Moving up to
High Levels:
DE, NL
Incidence & evolution of low pay among
employees, %, 1973-2005 (national data)
26
US
UK
DE up since
mid-1990s
(full-time!)
NL sharply
up from 9
to 17% in
mid-1990s
DE
NL
16
FR
FR
oecd
DK
6
1973
1977
1981
1985
UNIVERSITY OF AMSTERDAM
1989
1993
1997
2001
2005
AIAS
Low pay and employment rate in 2005
Incidence of low pay and employee
employment rate, %, 2005 (national data)
30
80
Low-wage incidence
Only FR
trade-off,
perhaps ...
25
25
% employees low paid
DK highest
E-rate and
lowest LWI
20
Employees/population 15-64
22.7
21.7
72
70
17.6
15
65
11.1
10
75
63
65
64
63
8.5
60
58
5
55
0
50
Denmark
France
Germany*
Netherlands
United
Kingdom
United
States**
*) 22.0 if estimated separately for East and West; **) estimated over CPS-ORG 2003-2005; ***) concentration self-employed from EU-KLEMS
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employees to population %
Low Pay and
Employment
Diverge
AIAS
Evolution employee employment rate
Contradictory
Movements
Pay and Jobs
Employees to population (15-64) ratio, %,
1973-2005 (OECD economic outlook)
75
DK
DK high
US up & down
UK down on
balance
DE, FR up
NL down & up
70
US
NL
65
DE
60
UK
FR
55
50
(head count!)
45
1973
1977
1981
1985
UNIVERSITY OF AMSTERDAM
1989
1993
1997
2001
2005
AIAS
Earnings mobility
Transitions
out of and into
Low Pay
% of employees remaining/transiting in a year,
pooled over 1995-2001 (ECHP)
DK
FR
DE
NL
UK
Remain low paid
0.487
0.492
0.601
0.618
0.580
High to low pay
0.030
0.048
0.035
0.042
0.061
Low to high pay
0.294
0.344
0.256
0.250
0.276
Into low-pay job
0.080
0.068
0.102
0.137
0.112
UK lower nojobs stays
Into high-pay job
0.214
0.109
0.122
0.129
0.166
Remain out of job
0.800
0.872
0.842
0.829
0.791
NL frequent
low-pay
access
Low pay to out
0.229
0.171
0.145
0.136
0.148
High pay to out
0.083
0.082
0.070
0.055
0.069
DK, FR more
mobile
upward
DK often via
no job?
UNIVERSITY OF AMSTERDAM
AIAS
Summary 1
Overall
 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
UNIVERSITY OF AMSTERDAM
AIAS
Characteristics of low pay
Demographics
Women
Employees-to-population ratios by age, %,
2001 (ECHP, Eurostat and CPS)
90
Low paid Part-time
80
4
4
8
60
50
38
20
(head count!)
13
9
11
10
8
4
6
5
Better paid
11
20
12
7
40
3
3
72
30
13
15
22
UK older
women
Low paid Full-time
70
Employment rate (%)
Youth makes
most of the
difference;
prime age
only DK
exceptional
20
10
13
13
55
51
53
52
52
32
26
14
17
4
6
41
12
11
53
8
3
4
8
24
22
25
27
32
0
DK FR DE NL UK US DK FR DE NL UK US DK FR DE NL UK US
15-24
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25-49
50-64
AIAS
Characteristics of low pay
Demographics
Men
Employees-to-population ratios by age, %,
2001 (ECHP, Eurostat and CPS)
90
Low paid Part-time
80
FR older men
lower, but not
because of
low pay
6
70
Employment rate (%)
Youth most of
the difference
again; prime
age DK less
exceptional
6
8
5
Low paid Full-time
8
Better paid
60
13
33
50
7
6
5
15
5
3
17
40
14
29
30
28
72
69
74
14
68
52
42
31
20
69
57
19
17
20
10
77
14
43
48
52
28
17
0
DK FR DE NL UK US DK FR
15-24
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DE NL UK US DK FR DE NL UK US
25-49
50-64
AIAS
Characteristics of low pay
Usual
Suspects and
...
Importance part-time (<35 hrs) jobs for lowwage employment, Netherlands, 1979-2005
30
70%
25
Youth:
educational
system incl.
grants
PART-TIME
20
15
24%
ALL
10
Female 2nd
earners
combine with
household
All seek parttime jobs
FULL-TIME
5
1979
1984
1989
1994
1999
2004
Part-time shares in low-wage employment, 2001
DK
FR
DE
NL
UK
US
38%
21%
35%
64%
49%
39%
UNIVERSITY OF AMSTERDAM
AIAS
Characteristics of low pay
Industries and
Low Pay
DK low risk
for women,
steep for age
NL steep for
education
UK, NL parttime effects
and risk of
continuation
Determinants (selected) of probability, pooled
1995-2001 (ECHP, bold significant)
DK
FR
DE
NL
UK
Female
>=30 & <45 years
>=45 & <65 years
0.195
-0.619
-0.731
0.458
-0.552
-0.422
0.475
-0.308
0.005
0.430
-0.584
-0.345
0.412
-0.313
-0.186
Secondary education
-0.421
-0.090
-0.364
-0.402
-0.244
Tertiary education
-0.699
-0.389
-0.665
-0.835
-0.320
Part-time
Temporary contract
>= 5 years
Sales occupations
-0.030
0.015
-0.045
0.450
-0.017
0.348
-0.223
0.455
0.077
0.008
-0.135
0.307
0.220
0.318
-0.035
0.283
0.170
0.169
0.002
0.529
Craft
0.219
0.246
0.239
0.130
0.211
Operators
0.236
0.342
0.162
0.246
0.494
Elementary
Trade, hotels, restaurants
0.360
0.150
0.527
0.147
0.310
0.214
0.334
0.125
0.620
0.453
Low pay at previous year
1.326
1.303
1.367
1.706
1.617
UNIVERSITY OF AMSTERDAM
AIAS
Characteristics of low pay
Shift-share
Comparison
of Low Pay
Sectoral
effects are
small &
comparable
DE, NL face
higher risk
with US
structure
Differences in low-wage incidence compared to
US structure and incidence, 2001 (ECHP)
Total
difference
due to
different
incidence
due to other
sectoral
structure
interaction
DK
-11.7
-10.4
-2.4
+1.1
FR
-8.1
-6.4
-3.2
+1.5
DE
-0.3
+3.3
-3.6
-0.1
NL
-1.0
+1.4
-2.5
+0.1
UK
-1.5
+0.3
-2.1
+0.3
UNIVERSITY OF AMSTERDAM
AIAS
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)
78
FR
DE, NL
strong fall,
towards low
pay
NL
67
DE
US, UK low,
declining
56
UK
FR may be
stable
US
(DK no data)
45
1973
1977
1981
1985
UNIVERSITY OF AMSTERDAM
1989
1993
1997
2001
2005
AIAS
Summary 2
Composition
 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 lowskilled 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
UNIVERSITY OF AMSTERDAM
AIAS
Poverty and pay
Working-age
Poverty and
Work
Low-pay threshold and poverty wages, 2005
(Eurostat)
200
US
Difference of
principle:
150
% of low-pay threshold
labourmarket pay
versus
worker’s
household
situation
UK
100
low-pay threshold = 100
50
0
Household types (8 UK, 48 US) >>
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Poverty and pay
Population and employed at risk of poverty (%),
importance of employed, 2005 (Eurostat)
25
Larger role
of employed
in UK, NL
% of population
% at risk among population, employed
Modest
aggregate
differences
50
48
44
% of employed
employed %
20
40
35
32
15
30
12
11
12
12
28
10
10
8
6
5
20
6
5
5
10
0
0
DK
FR
UNIVERSITY OF AMSTERDAM
DE
NL
UK
% employed among at risk population
Working-age
Poverty and
Work
AIAS
Poverty and pay
Households’
In-work
Poverty
Larger
differences,
and US much
higher
Proportion of the population in poor*
households, 1984–2001 (OECD)
With at least one worker
All households
1987
1994
2001
1994
2001
DK
..
1.9
2.6
3.8
5.3
FR
1.1
3.4
2.8
7.5
7.0
DE
4.0
3.3
4.3
9.4
9.8
NL
2.8
4.1
8.5
6.4
7.9
UK
6.9
3.5
4.7
10.5
10.7
US
10.0
9.7
13.2
18.4
16.9
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AIAS
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
60
Equal fall of
MW & MWemployment
Employees % <=LPT
20
55
Employee % <= MW
MW % of Median
15
50
10
45
5
40
0
35
1979
1982
1985
1988
1991
UNIVERSITY OF AMSTERDAM
1994
1997
2000
2003
2006
MW % of Median
No effect on
LWI
Employee % on low pay and on MW
25
AIAS
Affecting the tail of low pay
25
75
20
70
15
65
10
60
Employee-hours % <= MW
Employee-hours % <= LPT
MW % of Median
5
55
0
50
1979
1982
1985
1988
1991
UNIVERSITY OF AMSTERDAM
1994
1997
2000
2003
2006
MW % of Median
Strong fall of
MW, less of
MW jobs and
(later)
growth of
LWI
Minimum wage to median and employment at
minimum wage and low pay, NL 1979-2006
Employee hours % <= MW
Minimum
Wage and Low
Pay
AIAS
Affecting the tail of low pay
Minimum
Wage and Low
Pay
Increasing
MW, stable
MW jobs and
LWI
Minimum wage to median and employment at
minimum wage and low pay, UK 1999-2007
25
60
20
55
15
50
10
45
5
40
0
35
1999
2000
2001
2002
2003
2004
% all employees <LPT
% adult employees <LPT
% adult employees <=MW
adult MW % median
UNIVERSITY OF AMSTERDAM
2005
2006
2007
% 18+ employees <=MW
AIAS
Affecting the tail of low pay
Very long
tails for DE
without MW,
NL with
youth MWs
Very different tails and impact of minimum
wage
22
UK 79%
NL 84%
DK 88%
FR 95%
20
18
% of all employees
Distribution
of Low Pay
and MWs
16
14
12
DE (19.9%)
10
NL (17.0%)
8
UK (19.5%)
6
FR (14.8%)
4
DK (8.8%)
2
0
0
10
20
30
40
50
60
% of low-pay threshold
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70
80
90
100
AIAS
Summary 3
Policies
 1. Poverty and low pay are not identical
Overall
Conclusion
 LOW PAY MAY BE A COUNTRY’S
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
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
UNIVERSITY OF AMSTERDAM