Two reports published in the past few days paint a troubling picture of the problems facing us in the UK, both as an economy and a society – and highlight the palpable lack of commitment within the political class to tackling them.
The Resolution Foundation published the findings of its annual pay audit on Monday (ahead of the full report, due to be published later this week). It found that a record number of UK workers – some 5.2 million – were in low-paid jobs, which is to say, earning less than two-thirds of median hourly pay – equivalent to £7.69 an hour. In the last year alone the figure had risen by 250,000, the report says, reflecting the nature and limitations of the recovery. It also found that a disproportionate number of women are in low pay – 27 per cent of female employees compared to 17 per cent of men. And while that gap has been slowly narrowing for a number of years it has now begun to rise, albeit slightly.
The report highlights the economic damage caused by the ‘growing rump’ of low-paid, insecure jobs, which act as a drag on recovery by keeping tax revenues low while costing the taxpayer a fortune in in-work benefits.
The government response took the form of a predictable hat-tip to moves to take some low-paid workers out of taxation (though it is higher earners who benefit the most from the rise in personal tax allowance) and a reiteration of its commitment to consider raising the minimum wage. As the report notes, however, raising the minimum wage – though important – falls some way short of what is required. We need, instead, a wide-ranging low-pay strategy capable of lifting large numbers of people out of working poverty.
This, crucially, should involve going beyond smug self-congratulation at the number of jobs being created by the economy to consider the kinds of jobs being created and the kind of growth we want. And, of course, lurking behind these questions is the big one of the kind of society we want. It’s time we stopped pretending that reduced financial circumstances somehow excuse us from asking it.
This followed the publication of another equally valuable report, from the Smith Institute. Making Work Better describes an economy in which most workplaces are ‘broken’ and under-performing – an economy in which employment is rising, but most new jobs are low-paid and insecure, with outsourcing and zero-hours contracts on the rise (and becoming the norm in some parts of the economy). And, as the Resolution Foundation points out, once you are in low-paid work it is hard to get out – and, of course, the tendency for training opportunities to coalesce at the top of the food chain makes it that much harder for people to access the opportunities they need.
This, the report acknowledges, is not to say that there are no good employers out there, employers who invest in the training and development of their staff and allow them a say in the decisions that affect them. There are many. But the gap ‘between the best and the rest’ is getting ever wider, with fairly awful consequences not only for the economy but for wider society too.
The economic impact is evident. Productivity is 30 per cent higher in France, Germany and the USA than in the UK and is four per cent lower than in the first quarter of 2008. According to government figures, UK productivity in 2012 was 20 percentage points below the G7 average. If this trend continues, the report argues, we will see continued weak wage growth and a further squeeze on living standards.
Changing this, as the Resolution Foundation also acknowledges, demands not just more jobs, but better jobs. High productivity, the Smith Institute report says, goes ‘hand in hand with good industrial relations and voice at work’. More productive economies give their employees greater protection and a bigger say in how they organise their work. And, crucially, they invest in the skills of their people. Developed countries with high productivity tend to ‘have more high-skilled employment and less unskilled employment’. This is not the case in the UK where, as research from CIPD shows, one in five jobs requires only primary-level education and a third of workers are overqualified for their job.
And the prognosis is not good. Our continued failure to invest in high-end goods and services, and generate growth that is based on good jobs and fair pay, will lead to ‘a worsening of skills utilisation, persistent under-employment and continued job insecurity’, not to mention widening wage inequality.
There is, of course, also a profound human cost to our failure to invest adequately in our people and give them a say in the work they do. Many of the workers interviewed by the Smith Institute said they felt under-valued, overworked and disengaged. Their skills and talents, they say, are under-utilised. They feel insecure and anxious about work. They do not trust their employers and feel badly treated by them. And these worries are not confined to low-paid workers. They were just as pronounced among better-paid, skilled employees.
If we reflect on the centrality of work to our identity and sense of self-worth, it is not difficult to imagine the wider impact of bad workplaces on our health and wellbeing.
But what struck me most about the Smith Institute report was the notion of ‘workplace citizenship’. Its report argues that the best workplaces – the most successful and productive ones – are those that give their workers the greatest say over their work, that develop ‘a pervasive culture of consultation and engagement’, supported by job security and investment in training and development. Top-down models of work, by comparison, stunt innovation and productivity, creating a culture of mistrust, skills under-utilisation and anxiety. Many us will have worked in places where creativity is not only frowned upon but is practically a disciplinary offence. These are not places in which trust or good will flow freely.
The report highlights the role of lifelong learning in addressing these challenges, noting that working lives are longer and more likely to involve mid-life career change. An ‘appetite for learning’, it says, should be encouraged across the workforce, with a particular focus on those with low skills – those, perversely, least likely to benefit from opportunities to train and develop their skills. Workers need to ‘be given confidence that skills upgrading is an opportunity rather than a threat or a challenge’. And that, again, is about culture and ‘institutional architecture’. A culture of trust and collaboration creates an environment in which workers feel more comfortable not only in stating their training needs but in taking more ownership of their work. As the report suggests, we need to become as assertive as ‘workplace citizens’ as we are as consumers – but we need first to feel safe and secure about doing so.
Education and skills are critical in generating the productivity which enables higher wages and in creating not only more work but more good work. They have a huge and under-explored role in tackling these difficult and complex issues. The best workplaces go beyond offering job-specific training and attempt to create a genuine culture of learning which permeates the life of the organisation, from top to bottom. For most of those who have not fared well in the formal education system, however, their problems are compounded by poor prospects of advancement and little access to worthwhile education or training. For that reason it is vital that we strive to ensure a ladder of opportunity from basic skills to higher education, formal, non-formal and informal, with no rungs missing, for people of all ages, at every stage of their lives, wherever and whenever they need it. That, at least, should be the aspiration of any society that believes that the knowledge, experience and creativity of its citizens are its greatest strengths.
Sadly, in some respects, we seem to be going in the opposite direction, undoing historic gains in adult participation in education, for example, part-time HE, which has unravelled under the reformed funding system, and moving to a self-funded model in further education which has resulted in a substantial decline in adult participation at Levels 3 and 4. As I’ve argued before, we need to start seeing these issues as part of a single ecology, one problem, to which we need a broad, long-term, multi-faceted solution. The lack of political commitment to tackling these issues is reflected not only in our failure to think big, but in our failure to think coherently.