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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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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 StudiesEuropean Low-wage Employment Research network

www.uva-aias.netwww.uva-aias.net/lower.asp


Low wage labour a european perspective wiemer salverda

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


Level of low paid employment in 2005

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


Level evolution of low paid employment

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


Level evolution of low paid employment1

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%


Low wage labour a european perspective wiemer salverda

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


Low pay and employment rate in 2005

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 ...


Low wage labour a european perspective wiemer salverda

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!)


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

  • 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


Low wage labour a european perspective wiemer salverda

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!)


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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

DKFRDENLUKUS

38%21%35%64%49%39%


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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)


Low wage labour a european perspective wiemer salverda

  • 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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

Poverty and pay

Households’ In-work Poverty

Proportion of the population in poor* households, 1984–2001 (OECD)

Larger differences, and US much higher


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

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


Low wage labour a european perspective wiemer salverda

  • 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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