Tag Archives: employers

Costs and benefits of the National Living Wage

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English money

By Heather Cameron

Britain’s bosses have been urged by the government to prepare early for the introduction of the National Living Wage (NLW) in April next year.

Firms are advised to follow four simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible

Support

This push coincides with a new poll revealing that 93% of bosses support the Living Wage initiative, with a majority believing it will boost productivity and retain staff.

This is supported by new research by the University of Strathclyde and the Living Wage Foundation (LWF), which uses real-life case studies and evidence from employees working for accredited Living Wage employers. It suggests that paying staff a living wage leads to many business benefits – such as staff retention, more efficient business processes, improved absenteeism and better staff performance.

Potential benefits

Many of the findings highlighted relate to research on the London Living Wage (LLW). Among these include:

  • 50.3% of employees receiving the LLW registered above average scores for psychological wellbeing, a sign of good morale, compared to just 33.9% of non-LLW employees studied
  • an average 25% reduction in staff turnover was reported for organisations moving to the LLW
  • and 70% of employers studied reported reputational benefits through increased consumer awareness of their commitment to being an ethical employer

Estimates show that 4.5 million employees will see a rise in their wages as a result of the introduction of the NLW in 2016, with a further 2.6 million gaining from spillovers. By 2020, 6 million employees are predicted to have received a pay increase.

Up to one in four workers are expected to experience a significant positive impact from the NLW. If the result is indeed a happier workforce, perhaps the knock-on effect for businesses will be improved productivity.

There will however be variation across different parts of the UK and across different households, depending on how the NLW interacts with the tax and benefit system (it should be noted that many estimates were made prior to the u-turn on welfare reform). And let’s not forget that the NLW is not for all as under-25s will not be eligible.

Costs to employers

The impact on employees and therefore employment generally, will also depend on the actions firms take to prepare for the NLW in order to mitigate costs.

Indeed, the research from Strathclyde and LWF recognises that implementing the NLW will inevitably involve initial costs to businesses and could represent an issue for some companies more than others.

According to the Federation for Small Businesses, a negative impact on business is expected by 38% of small employers, with many expected to slow their hiring and raise prices.

It has been estimated that the NLW may lead to an increase in the unemployment rate by 0.2% points in 2020; resulting in around 60,000 more people unemployed and total hours worked per week across the economy around 4 million lower.

Businesses may also look to employ those under the age of 25 who won’t be eligible for the NLW. This could particularly impact on those sectors with a high proportion of lower paid employees, such as social care – a sector that is already under financial pressure.

The roll out of the Living Wage has certainly raised concern over potential costs for councils, which are having to deal with increasing budget cuts. The Local Government Association (LGA) has estimated that the NLW could cost local authorities £1bn a year by 2020/21.

So while increasing wages for low paid workers may seem like a no-brainer in the bid to help reduce in-work poverty, the full impact on employees, employers and therefore the economy, remains uncertain. Only time will tell what the true impact of the NLW will be.

Further reading: if you liked this blog post, you might also want to read our previous blog on the Living Wage. 

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Support for the squeezed middle: could public subsidies tackle London’s housing crisis?

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apartment building in Nottingham UK

A new report from the Centre for London has highlighted the potential of intermediate housing in supporting Londoners on middle incomes.

The report – Fair to Middling – argues that not only could publicly-subsidised housing help those on modest incomes in London find better places to live, but could play a vital role in ensuring that the capital retains the school teachers, bus drivers, chefs, nurses and other workers it needs to sustain its economy.

Chaired by the leader of Haringey Council, the Commission on Intermediate Housing was set up by the Centre for London to investigate the strengths and weaknesses of current housing policies with respect to those on middle incomes. Its latest report builds on a 2014 analysis, which found that house prices, rents, transport, energy and childcare costs were substantially higher in London than in the rest of the UK.

The new report paints a stark picture of London’s housing crisis. The Commission selected six households on modest incomes and charted the relationship between their earnings and house prices in four London boroughs. Among its findings:

  • Kensington and Chelsea is now unaffordable for all the selected households, and has been unaffordable for all but one of the households for the entire period covered;
  • Only the two highest earning households – a doctor, and a solicitor/journalist – can now afford to live in Haringey, but they will be priced out of the market in 2016 on present trends;
  • On present trends, both the nurse and the teacher households will find London unaffordable in two years, while the electrician household will only be able to afford Barking and Dagenham, and Enfield.

The authors warn that, unless action is taken to support the people it depends on to keep the city going, the consequences could be widespread and severe:

“Rising housing prices will inevitably squeeze these people out of the city or harm productivity in other ways – long commutes and unstable and overcrowded accommodation eventually affect performance.”

The benefits of intermediate housing
Fair to Middling makes the case for public subsidised housing in London, arguing that intermediate housing can:

  • help make housing more affordable for low-to-middle income earners;
  • keep London competitive and boost its economic success;
  • foster mixed income and stable communities.

Options for the future
The report describes overall supply of intermediate housing in London as “lamentably small”, amounting to less than 2% of the capital’s housing stock. Shared ownership – the most common type of intermediate housing – is, according to the Commission, an unfamiliar and complex product, and in the most expensive parts of London it is completely unaffordable.

The report suggests that intermediate rent offers the best deal to housing providers and investors.

“Local authorities and other housing providers should make appropriate use of intermediate rent products as well as those offering a route towards low cost home ownership. Intermediate rent policies should be offered at a range of levels to meet the needs of different types of household and households confronting expensive locations.”

The report also identifies examples of employers, such as universities, helping their staff secure affordable housing. It suggests that an employer-backed shared ownership scheme could help employees buy a share in a home that they otherwise could not afford, and help the employer attract and retain valuable workers while making a good return on its investment.

The Commission’s findings offer another reminder that, while solving the housing crisis won’t be easy, failing to tackle the problem risks creating challenges that may be much harder to overcome.

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Careers guidance: ready for the future?

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Image from Flickr user GotCredit, licensed under Creative Commons

By Stacey Dingwall

While there are many areas in which there are indications of recovery since the recession, the scale of youth unemployment is a persistent problem. According to the latest labour market figures from the Office for National Statistics (ONS), published on the 14th of October and covering the period July-August 2015, the unemployment rate for 16-24 year olds in the UK is currently 14.8%, compared to an overall unemployment rate of 5.4% for all 16-64 year olds who are eligible for work.

The youth (un)employment problem

Recent research has focused on the importance of improving the employability of young people in order to enhance their job prospects. Numerous employer surveys carried out by organisations including the Chartered Institute for Personnel Development (CIPD) and the UK Commission for Employment and Skills (UKCES) have indicated that employers are frequently unimpressed by the ‘work readiness’ of young people who apply for jobs with them. According to the UKCES, this can partly be attributed to the ‘death of the Saturday job’, and diminishing numbers of young people gaining valuable skills and experience for their future careers.

In its recent publications, Careers England has highlighted the important role of careers advice and education in tackling the youth unemployment rate. Their research highlights both the economic benefits of careers guidance, as well as those for the individual, including enhanced social capital.

Careers guidance, it is argued, “can play an important role in providing individuals with access to information and intelligence that is outside of their immediate social network, offsetting some of the disadvantages offered by inequalities in social capital”. Furthermore, it is suggested that those in receipt of careers guidance will be further aided by it as their working life continues, as it enables them to recognise the importance of networking to their career progression.

Good practice: Scotland

Over the summer, the Scottish Government announced a range of measures and initiatives to boost the employability prospects of the country’s young people. Alongside the announcement of over £5 million in funding for local government to help young people prepare for the world of work (as part of the Developing the Young Workforce youth employment strategy) came the promise of £1.5 million to support schools to provide careers advice to pupils from their first year of secondary school.

These announcements form part of the Scottish Government’s push to reduce youth employment in the country by 40% come 2021. Early indicators that this can be achieved look promising: figures released by the ONS in September covering the period May-July 2015 indicated that the youth unemployment rate in Scotland was at its lowest for this quarter since 2008, with the youth employment rate increasing by 25,000 to reach its highest level since the same period in 2005.

A particular careers guidance related programme that has been successful is My World of Work (MyWoW), an online careers service managed by Skills Development Scotland (SDS). A recent evaluation of the service by Education Scotland found that the value of the service is recognised by schools and colleges alike, with many FE support and teaching staff using it effectively and increasingly to engage learners in researching career options and exploring opportunities for further learning.

A key factor of the service is also its delivery online; as young people are used to engaging online, it is important that information is provided to them in their preferred format, as opposed to the traditional face-to-face interview with a careers advisor. Outside of the UK, countries including Finland have started to trial using social media in their delivery of career guidance.

An English ‘postcode lottery’?

In England, where responsibility for career guidance was devolved to schools in 2011, the landscape is currently a bit more fragmented. An evaluation of careers provision in schools and colleges published this year by Cascaid, a provider of careers information and guidance solutions, found that only 8% of schools/colleges have a systematic approach to integrating careers into the wider curriculum, while just over a third have a programme of activities with local universities and colleges.

English career guidance provision has also come under fire from the government: a 2013 inquiry into provision by the Commons Education Committee raised concerns over “the consistency, quality, independence and impartiality of careers guidance now being offered to young people”; and an Ofsted review following the devolution of responsibility to schools made criticisms including that provision was too “narrow” and not sufficiently coordinated so that all pupils were receiving appropriate guidance. Concerns about the inequity of career guidance have also been raised by the Sutton Trust, whose 2014 Advancing Ambitions report suggested that there was a ‘postcode lottery’ of provision in England.

The new Careers and Enterprise Company has been set up this year with £20 million of initial government funding, and it announced in September the nationwide roll-out of a network of Enterprise Advisers. These volunteers from employers will work directly with
school and college leaders to bridge the gap between the worlds of education and employment.

Future provision

Providing evidence to the Education Committee’s inquiry, the then Education Secretary Michael Gove suggested that careers advisors may not be an essential part of future careers guidance provision. Research has also indicated that pupils prefer to speak to someone they know, particularly subject teachers, with regards to their career ambitions. However, Ofsted’s review also found that the teachers in the schools they evaluated had not received sufficient training to provide information to pupils on the full range of options available to them. This is especially true of vocational education and career paths.

Considering the future of careers work in England, careers education and guidance consultant David Andrews proposes an option that could solve the problems raised above: schools employing resident careers development advisors with the responsibility of providing face-to-face guidance and working with teachers to deliver focused careers education programmes. Presumably this would include building links with local colleges and employers, something that has been identified as vital to increasing the youth employment rate, yet an area in which efforts have also been found to be lacking: per Ofsted, links between careers education and local employment opportunities in England remain “weak”.

Andrews also recommends the provision of an ‘all-age’ careers service in England. What is clear is that the careers education of the future must aspire to joined-up provision, involving clear communication between all parties. The provision of quality careers guidance is essential for not only the individual’s outcomes, but for the economy/society as a whole.

 

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Enjoy reading this? Read our other recent articles on related topics:

The self-employment boom … a challenge for government?

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By Heather Cameron

There are around 4.5 million self-employed people working in the UK – 1 in 7 of the total workforce. And based on the current rate of growth, it is expected that the self-employed will outnumber public sector employees by 2020. But what impact is this shift in the labour market having on the economy and on government policy?

Growth

Earlier this year we wrote about the rise in female self-employment and entrepreneurship. And generally, jobs recovery in the UK following the recession has undoubtedly been helped by self-employment, which accounts for over a quarter of the growth in employment since 2010.

While the recession has accentuated the growth in self-employment, it is a trend that predates the downturn and it is the significant drop in the numbers leaving self-employment that has been the main driver of growth over the last five years.

Also, as people are living longer and healthier lives, many don’t want to give up working at the traditional retirement age. There has been a 46.5% increase in freelancers over 50 since 2008, an age group that now accounts for 72% of all self-employed people.

This could be seen as a positive outcome of growing entrepreneurialism, contributing to economic growth.  On the other hand, some see it as a move towards more risky, insecure work.

Why self-employment?

There is a definite attraction to being able to work for yourself and organise your own working hours. Most self-employed workers have chosen this path and there is evidence to suggest that job satisfaction is high among self-employed workers.

The freelancing model can also be beneficial to firms as it provides flexibility in access to expertise, helping them to manage peaks and troughs in demand for their services and enabling them to test new ideas with less risk.

A recent study of freelance workers found that a number of factors affect their wellbeing. When working hours are higher than their normal working pattern, freelance workers were found to be calmer and more enthusiastic. However, when the demands they face are difficult or conflicting, then anxiety increases and enthusiasm declines, potentially leading to depression.

Self-employment is therefore not without its drawbacks.

Challenges

Self-employment is often associated with a lack of stability in terms of income and employment benefits such as holiday/sick pay and pensions, and difficulties in accessing financial products and housing.

A particular issue recently has been ‘bogus self-employment’ where workers who would normally meet the legal definition of an employee are registered as self-employed, therefore not receiving any of the employee benefits afforded to registered employees. The government also loses tax revenue and responsible businesses can be undercut.

Access to training is another big challenge for the self-employed as they can only treat training that improves existing skillsets as tax deductible, meaning training for new skills is not covered. As a recent report by Demos argues, this contradicts the aspiration of policy makers to promote entrepreneurial behaviour.

Worryingly, the number of self-employed people receiving training in the UK has fallen in recent years while other European countries have seen a rise. Limited access to training could become a real concern and contribute to the problem of low pay and poor progression rates for self-employed workers and across the wider labour market.

A recent report by IPPR highlights data suggesting that the earnings of the self-employed across Europe are falling relative to employee earnings, and many are looking for more hours or another job, raising concerns over living standards among this group.

As the UK is unique in its self-employment led recovery, this may be of particular concern. According to IPPR, the growth in self-employment could be driving a rise in in-work poverty alongside the jobs recovery.

Support

With a record number of self-employed people now working in the UK, it has been argued that the government needs to better support this growing section of the workforce.

Self-employment has surpassed growth in permanent employment by 3 to 1 in the last decade, but, as Demos has recently reported, government policy has yet to catch up with this structural shift.

There have been moves towards providing support for self-employment, such as the New Enterprise Allowance (NEA), set up by the previous government, which provides people on certain benefits with support to start their own business. Figures published at the end of 2014 show that the NEA has helped to set up over 60,000 new businesses.

Nevertheless, more needs to be done to bring policy in line with the current situation.

The report by Demos makes 18 recommendations for policy to protect the flexibility that self-employment offers, while addressing power imbalances within the marketplace. These include:

  • reducing red tape for firms and the self-employed;
  • providing greater certainty over employment status;
  • creating a tailored pension scheme for the self-employed;
  • aligning the tax treatment of training for employees and the self-employed;
  • and protecting the self-employed from loss of earnings.

In July, the government launched an independent review of self-employment which will consider how those who want to work for themselves can be better supported.

Due to be published in early 2016, perhaps the outcome of this will herald a shift in policy which is in line with the shift in labour market structure.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

The Idox Information Service can give you access to a wealth of further information on labour market policy. To find out more on how to become a member, contact us.

Further reading*

Neither one thing nor the other: how reducing bogus self-employment could benefit workers, business and the Exchequer

Self-employment and ethnicity: an escape from poverty?

Policy brief on sustaining self-employment: entrepreneurial activities in Europe

Business start-ups and youth self-employment in the UK: a policy literature review

Making sense of self-employment in late career: understanding the identity of olderpreneurs, IN Work, Employment and Society, Vol 29 No 2 Apr 2015, pp250-266

Self-employment: what can we learn from recent developments?, IN Bank of England Quarterly Bulletin, Vol 55 No 1 Q1 2015, pp56-66

The changing workforce (increased self-employment and flexible working practices), IN Business Voice, Jun/Jul 2014, pp20-24

*Some items may only be available to members of the Idox Information Service

Graduating into a brighter future?

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Image from Flickr user Luftphilla, licensed under Creative Commons

by Stacey Dingwall

Post-recession, the employment situation for UK graduates has not been great. Following the economic crash, headlines and statistical releases alike screamed about how bad it was out there for the recently graduated. Graduates were portrayed as either unemployed or underemployed, i.e. forced to accept roles for which their qualifications were not required or unpaid internships. With the end of the recession however, has the situation improved?

The graduate job recession

In 2010, the number of graduates in full-time work, three months post-graduation was 51% – its second-lowest level since 2003 (57%). And in 2009 The Association of Graduate Recruiters (AGR) was reporting that the number of graduate vacancies being advertised had fallen by up to a quarter since before the recession.

With record numbers of graduates now competing for each vacancy, and competing not only with their own graduating class but also with earlier cohorts, it could have been concluded that the era of the traditional graduate employment route was on its way out.

A return to form?

According to recent figures, however, things are looking up. Previewing the second 2015 update of its Graduate Recruitment survey, AGR describes the current graduate market as ‘buoyant’, and notes that the findings of the previous survey indicated an 11.9% increase in graduate vacancies on the previous year. These findings are backed up by the September 2014 edition of the Higher Education Careers Services Unit’s (HESCU’s) What do graduates do, which described the employment prospects for 2012/13 graduates as ‘dramatically improved’ compared to those of their immediate predecessors, with their unemployment rate six months after graduating down at 7.3% from the previous year’s 8.5%.

Additionally, the most recent release of the High Fliers graduate recruitment study suggests that those graduating in 2015 are doing so into the “most attractive graduate market in a decade”, and predicts 8% more vacancies than the previous year. It also notes that the class of 2015 are the first to graduate having paid tuition fees of up to £9,000 per year; this has led to the end of the image of students merely partying their way through their time at university, with the majority now focused on securing a promising career for themselves from as early as first year.

The new face of the graduate job

The prospect of graduating with tens of thousands of pounds of debt appears to be proving quite the motivation for today’s students. Rather than waiting until their final year to seek out internships and careers advice, High Fliers reports that firms are now taking on first year undergraduates in placement roles. Building up a relationship with a desired employer as early as possible is now the key way of securing a job post-graduation according to the report, with those with little or no work experience described as having “no chance” of receiving the offer of a place on a firm’s graduate programme.

AGR’s chief executive Stephen Isherwood has also pointed towards this trend, suggesting that graduate recruitment is being replaced with ‘student recruitment’, as those leaving university face competition from those still at university who have already been hired by employers for apprenticeships or have succeeded in finding an employer to sponsor them through the rest of their studies.

Another issue, as highlighted by Gerbrand Tholen, is the changing definition of what constitutes a graduate job. He notes that the previous understanding of what made a graduate occupation (those that combined expertise, strategic and managerial skills and interactive skills) has been abandoned in favour of defining the extent to which the role utilises specialist, orchestration or communication expertise.

This has led to a blurring between the lines of graduate and non-graduate roles, and also issues with compiling official statistics on the number of graduates employed in each arena. In 2014, the director of High Fliers, Martin Birchall, criticised the Office for National Statistics for not updating their definition of a graduate job since 2002, after they released data which suggested that 47% of recent graduates were not working in jobs which required a higher education qualification. This issue is further compounded by the issue of ‘over-education’ and ‘under-employment’, and the question of whether employers have been able to benefit from a more highly skilled workforce.

The graduate class problem

An important thing to keep in mind is that reporting on graduate labour market trends tends to focus primarily on the most general of findings – considering graduates as a homogenous group. This is particularly true in terms of the social backgrounds of graduates: research has found, and is continuing to find, significant differences in the labour market experience for graduates from working class backgrounds and their more socially privileged backgrounds. Until this much wider issue of a lack of social mobility within the graduate labour market can be addressed, it is perhaps too early to describe the situation as ‘buoyant’ – at least for everyone.

 

The Idox Information Service can give you access to a wealth of further information on education and employment trends; to find out more on how to become a member, contact us.

Further reading on the topics covered in this blog *

‘Graduate jobs’ in OECD countries: development and analysis of a modern skills-based indicator (LLAKES research paper 53)

What do graduates do? Employment review, IN Graduate Market Trends, Autumn 2014, pp12-14

Graduates’ experiences of non-graduate jobs: stop gaps, stepping stones, or dead ends?, IN Graduate Market Trends, Summer 2014, pp6-8

‘You have to be well spoken: students’ views on employability within the graduate labour market, IN Journal of Education and Work, Vol 27 No 2 Apr 2014, pp179-198

The gap between the proportion of young graduates from professional backgrounds who go on to a “graduate job” six months after graduating and young graduates from non-professional background

We need to talk about graduates: the changing nature of the UK graduate labour market

*Some resources may only be available to members of the Idox Information Service

Zero future for zero hours in a fair economy?

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By Stacey Dingwall

The Office for National Statistics (ONS) has released its second annual update on the number of people employed on zero hours contracts, which suggests that in August 2014 UK firms were employing 1.8 million people on such contracts.

What is a zero hours contract?

According to Acas, the term ‘zero hour contract’ (although not defined in legislation) can be understood as “an employment contract between an employer and a worker, which means the employer is not obliged to provide the worker with any minimum working hours, and the worker is not obliged to accept any of the hours offered”.

Use of the contracts has been a highly controversial issue in recent months, with high-profile retailers such as Sports Direct (who employ 90% of their part time staff on zero hours contracts) coming in for criticism of their “exploitation” of their employees. The sports retailer is also facing legal action from hundreds of their workers due to their exclusion from the company bonus scheme, thanks to the nature of their contracts.

Increasing or not?

The ONS’ first Analysis of Employee Contracts that do not Guarantee a Minimum Number of Hours found that between January and February 2014, 1.4 million UK workers were employed on zero hours contracts. Despite the inevitable headlines depicting the new figure as a direct increase from the 2014 analysis, the ONS was careful to warn against this in its latest analysis, noting that it covers a different time of year than the first release therefore the number of contracts reported may be affected by seasonal factors.

The latest release also includes data from the Labour Force Survey (LFS), which indicates that the number of people employed on zero hours contracts in their main employment, between October and December 2014, was 697,000 or 2.3% of all people in employment. The figure for the same period the year before was 586,000 or 1.9% of people in employment although again, the ONS are careful to stipulate that they can’t be certain how much of this ‘increase’ is due to greater recognition of what constitutes a zero hours contract, as opposed to new contracts.

The Economic Research Council suggested that a lot of the jobs that have been created recently have come with much less security and guaranteed pay. And the UK Commission for Employment and Skills have noted that 33% of people on zero hour contracts would like to work more hours (either in their current job or in a different one), compared to just 13% of people not on a zero hour contract.

Zero hours and the general election

The issue of the use of zero hours contracts looks set to become a key feature of parties’ campaigns in the upcoming general election. Current Secretary of Business, Innovation and Skills – Liberal Democrat Vince Cable – has already put forward legislation (clause 151 of the Small Business Enterprise and Employment Bill, currently before the House of Lords) which would see exclusivity clauses in contracts (which prevent those employed on zero hours contracts from seeking additional work to supplement their income) banned.

The Conservative Work and Pensions Secretary, Iain Duncan Smith, has however defended the contracts, arguing that they “provide people with a flexible way of working and the freedom to arrange jobs around other commitments” and “allow employers to be competitive in response to market trends”.

What of the other parties? Labour has vowed to “end exploitative zero hours contracts” and introduce “new rights” to employees on such contracts, however has stopped short of proposing to ban employers from offering them altogether. Somewhat embarrassingly for the party, figures released by the Independent Parliamentary Standards Authority (IPSA) and seized on by the tabloids, have indicated that over 30 Labour MPs employed staff on zero hours contracts in 2014.

The Green Party is firmly against the use of zero hours contracts altogether: leader Natalie Bennett has been calling on the government to place an outright ban on them since 2013. UKIP leader Nigel Farage has also criticised the long-term use of zero hours contracts by employers, and has called for large employers to be subject to a code of conduct as to how they are applied.

Zero hours contracts aren’t a financial necessity

In these times of budget cuts, many local authorities have argued that they have no choice but to offer some of their workers zero hours contracts. One area in which this has been particularly prevalent is in the provision of social care, with some employees paid on a ‘time and task’ basis, i.e. only for the amount of time they actually spend with a client, which can be as little as 15 minutes in some cases.

In 2012, Southwark Council took the decision to move away from this approach, after feedback from care workers and service users indicated that it did not allow workers to carry out their duties with the required level of compassion. The Council carried out a review of their homecare services and found that extending the length of visits greatly helped in keeping service users healthy in their own homes and out of hospital and residential care. It also noted that the costs of providing longer visits had been ‘passed on’ to their care workforce over time through the use of zero hours contracts and, wishing to end this, announced that from October 2014 they would be eliminating their use altogether, and offering guaranteed hours of employment to their staff.

Immediate reaction to the release of the latest figures has been plentiful; it now remains to be seen whether it is reflected in party campaigns in the forthcoming general election.

The Idox Information Service has a wealth of research reports, articles and case studies on zero hours contracts and other employment issues. Items of interest include:

The decent jobs deficit: the human cost of zero-hours working in the UK

Give and take? Unravelling the true nature of zero-hours contracts

Zero hours contract: not all bad news

Zero-hours contracts: myth and reality

Flexibility or insecurity? Exploring the rise in zero hours contracts

Spreading the word on the living wage

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By James Carson

Last week, Church of England bishops issued a letter calling for a new direction that they believe political life in the UK ought to take. Among the bishops’ recommendations was support for the living wage:

“It represents the basic principle that people are not commodities and that their lives cannot adapt infinitely in response to market pressures.”

It didn’t take long for the media to find flaws in the Church’s own approach to paying its staff. This week it was reported that a Church job in Canterbury was being advertised at £6.70 per hour. The living wage, calculated from the basic cost of UK life, is currently £7.85 an hour outside London.

Low pay seems likely to be one of the key issues in the general election campaign, so a new report from the Joseph Rowntree Foundation (JRF) is especially timely.

Low pay is endemic

The report describes low pay as “endemic” in the UK labour market, noting that more than one in five workers in the UK experience low pay, a proportion that has changed little in more than 25 years.

Among the research findings:

  • More than a third of low-paid workers (38.4%) experience a period of worklessness over a four year period;
  • Being low paid increases the probability of experiencing a period of worklessness by around 10%, after accounting for a host of individual, family-level and employment characteristics;
  • Those low-paid workers on temporary contracts, and those with work-limiting health conditions or disabilities, are the most likely to experience a spell of worklessness over a four-year period.

The authors of the report express concern that when many of those workless individuals who were formerly low paid return to employment, it is to a similarly low level of earnings.

“This low-pay, no-pay cycle means many find it difficult to escape low living standards and advance in the world of work.”

In addition, the JRF report highlights  the significant burden on the state of having large numbers of low-paid workers alternating between employment and worklessness, and suggests that significant fiscal savings could be made if job security for those in low-paid positions was strengthened.

While the paper does not propose any specific policy recommendations to tackle the employment insecurity of low-paid work, the authors suggest that several areas of policy offer potential for co-ordinated solutions to this problem, including:

  • extending access to skills and training to those who are in work and lack qualifications;
  • limiting the burden of unplanned absence from work to employers through the targeted re-introduction of schemes such as statutory sick pay recovery;
  • providing support alongside incentives for low-paid workers to progress through in-work conditionality within Universal Credit.

The movement to encourage more employers to pay the living wage has picked up pace in recent months. Organisations such as Citizens UK and the Living Wage Foundation have campaigned to encourage more employers to pay the living wage. Even so, by the end of 2014, only 60,000 people in the UK were covered by this pay rise, with none of the big supermarkets or large care firms involved. Some local authorities, however, including Glasgow, Cardiff, Birmingham, Newcastle and the Greater London Authority, have adopted the living wage.

As the JRF report underlines, paying the living wage to employees results in reduced welfare benefits and extra taxes. Which means that, whether the employer is Tesco or the Archbishop of Canterbury, the living wage can give people basic rights and a sense of dignity in work, while making good economic sense for the nation’s coffers.

Further Reading

We’ve previosuly blogged on the living wage and addressing the causes of in-work poverty.

Other resources which you may find interesting (some may only be available to Idox Information Service members):

Wealth: having it all and wanting more

The benefits of tackling worklessness and low pay

Ten years of the GLA’s London Living Wage

Bare minimum is not enough (living wage)

Low pay Britain 2014

Young people’s quest for work experience hampered … by lack of work experience

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By Stacey Dingwall

The UK Commission for Education and Skills has released a new report, Catch 16-24: youth employment challenge, which suggests that today’s young people are facing a ‘postcode lottery’ when searching for work experience.

According to the UK Commission’s analysis, most English regions are lagging behind Scotland, Wales and Northern Ireland in terms of the number of employers offering work experience opportunities to young people. The Humber, with one of England’s highest youth unemployment rates, is identified as being a particular work experience ‘blackspot’, with only 29% of employers offering placements.

The new report comes a year on from the publication of another report from the UK Commission, Not just making tea: reinventing work experience. This outlined the vital importance of work experience not only for young people, but for employers themselves, and dispelled common myths that often deter employers from offering opportunities. Multiple case studies showed the benefits enjoyed by companies, large and small, when they invest in young people through work experience.

Why then, a year on, does the UK Commission’s latest research still indicate that only 20% of employers across the UK currently offer work experience to schools, and only 12% to colleges?

A barrier to social mobility

The report suggests that location is not the only factor hindering young people’s chances of obtaining work experience – personal contacts also play a significant role. The need to ensure that employment outcomes for young people are not constrained by their social or ethnic backgrounds (“it’s not what you know, but who you know”) has also been raised by both the Sutton Trust and the Social Mobility and Child Poverty Commission in the last year.

The Sutton Trust’s Internship or Indenture? briefing supports the UK Commission’s description of London as the “internship capital of the country” and places the total cost of undertaking a six-month unpaid internship in the capital at £6,081 (including transport costs) and £5,078 for doing so in Greater Manchester. The importance of undertaking internships and work experience placements in order to gain entrance to professions such as law and finance is highlighted, alongside the fact that only those from wealthy backgrounds are likely to be able to bear the costs of working for free for any significant period of time.

In order to tackle ‘elitist Britain’, the government’s Social Mobility and Child Poverty Commission recommended that both schools and employers should do more in order to ‘close the gap’ in the provision of work experience opportunities to pupils from less affluent backgrounds.

Employers want new recruits to have work experience

The ‘catch’ for young people in terms of work experience is laid bare in the UK Commision’s new report: 66% of employers rate experience as a ‘critical’ or ‘significant’ factor when it comes to recruitment decisions yet less than a third of this figure are currently prepared to offer opportunities.

The impact of this on the UK’s continuing high rate of youth unemployment is highlighted – the UK has “German levels of adult unemployment but Eurozone levels of youth unemployment”. The UK Commission has previously used case studies of the work experience systems of countries including Australia and the Netherlands to show the positive benefits of integrating work experience into education for youth employment rates.

So, what will it take for UK employers and educational institutions to adopt closer relationships in order to improve the work experience offer for young people?

Improved collaboration

Despite indications that the number of employers taking on apprentices is increasing, and encouraging examples of collaborations between schools and employers, Katerina Rüdiger of the Chartered Institute of Personnel Development (CIPD) believes that the government should do more to facilitate employer-education relatationships. Reacting to the new UK Commission report, Rüdiger called for the government to “create a role in local authorities so they can work with the National Careers Service to provide resources and broker relationships between young people, schools and employers to generate routes into work”. The involvement of government in facilitating this type of collaboration has also been described as vital by the UK Commission.

The UK Commission has described the December 2014 announcement of a new careers and enterprise company for English schools (with the aim of encouraging employers to link directly to pupils throughout their education) as “promising”. This follows its previous call for the rest of the UK to follow the lead of the Scottish Government which, through its commission for developing Scotland’s young workforce, is aiming to achieve links with employers for each of the country’s secondary schools over the next three years.

Whether these initiatives will have the required impact on the UK’s work experience offer for young people remains, of course, to be seen in another year’s time.

Further reading

The Idox Information Service has a wealth of research reports, articles and case studies on work experience and youth employment. Items of interest include:

Work experience: benefits and impact (Series briefing note 44)

Undergraduates’ memories of school-based work experience and the role of social class in placement choices in the UK

Making work experience work: top tips for employers

Work experience doesn’t work, says Wood Commission

The effects of work experience during higher education on labour market entry: learning by doing or an entry ticket?

Sharing the caring – tackling the cultural and financial barriers to Shared Parental Leave

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Baby hand in father's palmBy Donna Gardiner

New Shared Parental Leave legislation came into force in England, Scotland and Wales on the 1st December 2014.

The legislation provides much greater flexibility in regards to how parents care for their child over the first year of his or her life. Specifically, a new mother can opt to curtail her maternity leave (subject to a minimum of two weeks), and have the child’s father or her partner take any of the remaining weeks as Shared Parental Leave.

Anticipated uptake and impact

The aim of the legislation is to encourage more men to share childcare, drive greater gender equality in the workplace, and eliminate discrimination around maternity leave. The government estimates that around 285,000 couples will be eligible to share leave from April 2015, and that take up will be around 8%.  However, it is not clear whether significant numbers of fathers will take up Shared Parental Leave in practice.

On one hand, there does appear to be evidence that fathers will welcome the new proposals. Research conducted by Working Families found that many fathers wanted to increase the amount of time they spent at home with their children. Indeed, many fathers, particularly those in the 26-35 age group, felt resentful towards their employers because of their poor work-life balance.

These findings are echoed by the IPPR, which found that one in five fathers wanted to change their working patterns, and another one in five wanted to spend more time with their baby, but couldn’t because of financial or workplace reasons. Another report found that over half (57%) of fathers working full time wanted to reduce their hours to spend more time with their children.

Cultural and financial barriers

However, despite the apparent desire among fathers to spend more time with their children, considerable barriers remain. Continue reading →

Performance-related pay in the public sector … does it work?

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English moneyBy Donna Gardiner

Pay accounts for a large proportion of public sector expenditure and so it’s perhaps unsurprising that in the current context of ‘do more with less’, there has been renewed interest in using pay to help drive performance improvements.

Indeed, as part of last year’s spending review, the government announced the introduction of performance-related pay for all civil servants by 2015-16. It is also working towards the removal of automatic pay progression in schools, prisons, the NHS and the police. In his Budget statement, the Chancellor called progression pay “antiquated” and said it was “deeply unfair” to others within the public and private sectors who did not receive it. Continue reading →